Beyond the Bitcoin ETF Boom: The Infrastructure Challenge Facing Digital Asset Managers

The approval of spot Bitcoin ETFs in January 2024 was a pivotal moment for digital assets, marking the true start of the institutionalization of digital assets. Since inception, Bitcoin ETFs have shattered Wall Street records. Notably, BlackRock’s Bitcoin ETF, IBIT, recently became its highest earning ETF, and is now generating more income for the company than their S&P 500 fund. But the market has already moved beyond Bitcoin.

The Next Wave 

Ethereum, Solana, and a range of other assets are now entering the conversation, with ETF filings, index proposals, and staking-enabled strategies already on the table. What began as access to a single asset is quickly evolving into a broader shift in how institutions engage with the entire crypto ecosystem.

For ETP (exchange-traded product) issuers and digital asset managers, this expansion represents opportunity and complexity. Qualified custody has become table stakes and issuers are realizing that successful digital asset funds need more than just secure storage. 

The Real Operational Challenges

With qualified custody as a non-negotiable, the difference between success and failure for a fund begins to hinge on seamless integrations within the operational process that enable scalability and performance. Most issuers quickly discover:

• Fragmented solutions create systemic risk: custody, trading and settlement operating as separate systems, managed through different partners, introduces risk, can create delays and multiple points of complexity across the operational stack. 

• Liquidity and competitive execution are key: creation and redemption cycles demand efficient execution of large blocks, potentially across multiple assets. This requires connectivity to liquidity providers, market makers and exchanges that do not compromise execution quality.

• Risk management cannot be an afterthought: operating across disconnected systems makes comprehensive oversight almost impossible. Control, compliance monitoring and audit trails must be architectured in your infrastructure from day one, not retrofitted. 

• Operational friction limits scale: as product lines expand and AUM grows, manual processes become bottlenecks and often break down when put under pressure.

Addressing these challenges requires integrated infrastructure where qualified custody services as the foundation for seamless trading, settlement and risk management at institutional scale.

The Solution: BitGo’s Integrated Infrastructure That Performs 

BitGo’s platform was purpose-built to solve these challenges. 

• Deep liquidity and expert execution: streamlined trading through BitGo’s electronic platform and OTC desk combining access to deep liquidity, quality execution and unmatched expertise. Assets remain with BitGo, not on exchanges or with counterparties, to manage counterparty risk and exposure.

• Institutional-grade staking for optimized rewards: seamless staking directly from regulated qualified custody with trusted validators enabling providers to broaden their product suite and deliver additional value through blockchain rewards.

• Qualified custody that doesn’t compromise performance: safeguard assets without adding friction. BitGo provides the highest levels of safety and security with 100% cold storage, segregated accounts and bankruptcy-remote architecture to separate your assets from BitGo’s and other clients’. 

• Operational excellence and risk management at scale: manage risk at every level with built-in controls, permissioning, and automated policies that allow for audit-ready operations and fast coordination across teams. 

The results: a unified platform where custody, liquidity and operational infrastructure work together to deliver the performance and scale required for today’s digital asset ETP issuers.

BitGo’s Experience Supporting Institutions

As the qualified custodian behind some of the most active and sophisticated digital asset ETP issuers in the world, BitGo enables companies like 21Shares, Hashdex, CoinShares, and Canary Capital to bring digital asset products to market securely.

Globally regulated with SOC 1 and SOC 2 Type 2 certifications, BitGo also maintains $250M in insurance for theft, loss or misuse. BitGo provides the confidence needed to build a successful digital asset product while satisfying fiduciary responsibilities and regulatory requirements. 

For over a decade, BitGo has worked with regulated entities, public companies, and fiduciary asset managers to design infrastructure that works under pressure and performs at scale. 

Want to learn more about how BitGo can support your operations? Schedule a call with us.