Zodia Custody, a prominent institution-first digital asset custodian, has announced a strategic partnership with 21Shares, a leading ETP issuer. This collaboration aims to provide custody services for physically backed ETP products in Switzerland and the broader European market. This move is significant, as digital asset exchange-traded products have gained considerable traction among institutional investors in a relatively short period.

By the end of the first quarter of 2024, 937 professional investors held $11 billion in U.S. spot bitcoin exchange-traded funds, accounting for approximately 20% of the ETFs' total assets. In contrast, gold ETFs had only 95 professional investors in their first quarter post-launch, representing less than 10% of bitcoin ETFs' reach. This growing demand for ETPs has created a need for enhanced security and expert custody services throughout the issuance to redemption lifecycle.

Through this partnership, 21Shares will offer its investors an additional layer of security, protection, regulatory compliance, and transparency for its physically backed ETPs. Institutions using 21Shares for ETP investments will benefit from cold-storage wallets, coupled with 24/7 instant access. This will enable investors to move swiftly in response to market fluctuations. The partnership's primary objective is to provide institutional investors with greater risk management controls, stemming from the custodian's bank-grade and compliant approach to custody.

The partnership between Zodia Custody and 21Shares highlights both firms' commitment to security and transparency. This collaboration represents a means for institutions to gain exposure to digital assets, including ETPs, with the same standards and guardrails seen in traditional finance. Julian Sawyer, CEO of Zodia Custody, emphasized that ETPs hold significant potential, and institutional demand is clear. The partnership with 21Shares aims to deliver a meaningful impact on the ecosystem without compromising security, risk management, or compliance.

Mandy Chiu, Head of Financial Product Development at 21Shares, expressed enthusiasm about partnering with Zodia Custody, leveraging their expertise in secure digital asset storage and management. This collaboration marks a significant milestone in their commitment to providing top-tier investment opportunities for clients. Zodia Custody's industry-leading cold storage infrastructure and streamlined compliance solutions have enhanced their offerings, ensuring investors benefit from advanced and diversified custodial services. Together, they aim to set new standards in the digital asset market, drive growth, and foster trust among institutional investors.

Zodia Custody's partnership with 21Shares follows a similar collaboration with Germany's DWS Group to provide custody services for the company's Xtrackers Galaxy Physical Bitcoin and Ethereum ETPs listed on Xetra. Other players leveraging Zodia Custody's digital asset services include Marathon Digital Holdings, ETC Group, Polkadot Ecosystem, governments, and law enforcement agencies. This partnership demonstrates the growing recognition of digital assets as a viable investment option and the need for secure and compliant custody solutions.