Today Deutsche Bank asset manager DWS (AUM EUR 896 billion) launched its first Xtracker branded crypto exchange traded products (ETPs) for physical Bitcoin and Ethereum. This follows a partnership announced last year with Galaxy Digital. Separately, Zodia Custody disclosed it is one of the custodians of the underlying cryptocurrencies.
Zodia Custody’s backers include Standard Chartered’s SC Ventures, Japan’s SBI and Northern Trust. For the DWS Xtracker products, Coinbase is a custodian alongside Zodia. State Street will act as the issuing, paying and administration agent.
“With digital asset ETPs capturing the attention of the market, the combination of our education-first approach and partnering with institutional- grade service providers like Zodia provides a compelling offer,” said Sam Sadayo, Director, Xtrackers Product & Platform Development, DWS Group.
This is the second major ETP custody deal announced by Zodia Custody this week. Yesterday it said it entered a strategic partnership with ETC Group, the specialist European ETP issuer with $1.64 billion in assets under management (AUM).
Zodia’s Irish subsidiary already acts as custodian for several products, including ETC Group’s new Ethereum staking ETP. However, BitGo is still listed as the custodian for ETC’s flagship physical Bitcoin ETP, which has $1.46 billion in AUM. In its announcement Zodia said there will be a significant migration in assets.
“With the digital asset ETP market accelerating at great speed, it is essential that we are able to provide investors with the best possible custody solutions. We see Zodia Custody as a new benchmark,” said Tim Bevan, CEO, ETC Group.
Traditional custodians have an edge
Owing to an SEC accounting rule, no incumbent banks provided custody for the 11 US Bitcoin ETFs issued in January. However, outside the United States, there is no such limitation. It makes sense to apply the experience of incumbents looking after vast sums of money to the crypto sector.
While Northern Trust may be a minority shareholder in Zodia Custody, it contributes its knowledge and reputation as one of the leading global custodians with more than $15 trillion in assets under custody.
