How is 21Shares shaping the next phase of crypto ETFs?

Key Points
1- 21Shares is moving crypto ETFs beyond passive investment with actively managed strategies.
2- The company leverages both bottom-up research and top-down risk management to optimize portfolios.
3- Regional investor demand differs: US favors large coins, Europe explores newer assets and applications.
4- Active management and thematic products, including staking and multi-asset strategies, are reshaping crypto ETPs.
5- Integration with FalconX supports innovation and more sophisticated crypto offerings.

How 21Shares Is Shaping the Future of Crypto ETFs

The world of cryptocurrency exchange-traded products is evolving rapidly, and 21Shares is at the forefront of this transformation. Traditionally, crypto ETFs and ETPs were designed to passively track the price of assets like Bitcoin and Ethereum. However, with the market maturing and investor expectations changing, 21Shares is pioneering a shift toward actively managed crypto strategies that go beyond mere price exposure.

Duncan Moir, president of 21Shares, emphasizes that cryptocurrencies, as an emerging asset class, are particularly well-suited for active management. “The combination of research-driven investment decisions and discretionary strategies allows us to manage risk more effectively while capturing unique market opportunities,” Moir explains.

From Passive Tracking to Active Management

The firm employs a hybrid approach to portfolio management, blending bottom-up research on individual crypto assets with quantitative and discretionary top-down strategies. This allows the team to balance risk and optimize positioning across different market conditions. To support this growth, 21Shares has expanded its portfolio management and trading teams, bringing in specialists with diverse expertise in trading, risk control, and strategic asset allocation.

Global active ETFs have seen nearly $1.8 trillion in assets at the end of 2025, highlighting the growing demand for products that go beyond passive exposure. By entering this space, 21Shares is positioning itself to meet the needs of investors seeking smarter, more flexible crypto investment options.

Regional Investor Trends: US vs Europe

Moir notes that investor demand for crypto products varies significantly by region. In the United States, interest largely centers on established cryptocurrencies like Bitcoin and Ethereum. Conversely, European institutional investors are exploring newer assets and innovative applications beyond layer-1 blockchains. This divergence stems from a more mature European investor base, many of whom already hold Bitcoin and Ethereum and are now looking to expand their crypto portfolios with diverse opportunities.

Reflecting this trend, 21Shares recently launched a European exchange-traded product tied to Strategy’s preferred stock (STRC), which provides exposure to a high-yield instrument connected to Bitcoin-focused strategies. The product has attracted strong early demand, indicating that investors are increasingly drawn to yield-generating crypto assets accessible through conventional brokerage platforms.

Innovations in Crypto ETPs

As the crypto market matures, issuers are exploring more sophisticated structures, moving away from traditional price-tracking models. One such innovation is staking, which enables investors to earn rewards by locking up crypto assets to secure blockchain networks. For instance, Grayscale has introduced staking rewards for Ether, making it the first US-listed spot crypto ETF to offer this feature. BlackRock has also launched a Nasdaq-listed Ethereum product combining spot exposure with staking-generated yield, recording impressive initial trading volumes.

21Shares evaluates potential product launches based on three key factors: internal research, client demand, and broader market trends. This approach allows the firm to introduce both niche single-asset products and broader thematic offerings. A prime example is their Bitcoin-and-gold ETP, which has delivered strong risk-adjusted returns in Europe over the past four years and demonstrates the diversification benefits of combining traditional and digital assets.

Strategic Integration with FalconX

The acquisition of 21Shares by FalconX has accelerated the company’s ability to innovate. This integration provides access to advanced infrastructure and resources, supporting the creation of more complex and actively managed products. Moir emphasizes that this collaboration enhances their capacity to deliver sophisticated offerings that appeal to both retail and institutional investors globally.

FAQ

Q1: What makes 21Shares’ crypto ETFs different from traditional ETFs?
A1: Unlike traditional ETFs that passively track prices, 21Shares actively manages crypto portfolios using a mix of bottom-up research and top-down risk strategies to optimize returns and manage market volatility.

Q2: Which regions are seeing the highest demand for active crypto products?
A2: In the US, demand is concentrated on major coins like Bitcoin and Ethereum, while European investors are exploring newer crypto assets and applications, seeking diversified and thematic exposure.

Q3: What is staking in crypto ETFs?
A3: Staking allows investors to lock up crypto assets to help secure blockchain networks and earn rewards, which can be integrated into ETFs to generate additional yield.

Q4: How does the FalconX acquisition impact 21Shares?
A4: FalconX provides enhanced infrastructure and resources, accelerating the development of more complex, actively managed crypto products.

Q5: Are there multi-asset crypto ETFs?
A5: Yes, 21Shares offers multi-asset products like Bitcoin-and-gold ETPs, which combine traditional and digital assets for diversification and risk-adjusted returns.

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