(HedgeCo.Net) In a major development for institutional crypto access, Swiss digital-asset manager 21Shares announced the launch of two U.S.-listed exchange-traded funds (ETFs), marking a shift toward diversified crypto baskets under the Investment Company Act of 1940 (the “’40 Act”). Reuters
What’s new
- The two ETFs are: FTSE Crypto 10 Index ETF (ticker: TTOP) and 21Shares FTSE Crypto 10 ex-BTC Index ETF(ticker: TXBC).
- They track a basket of cryptocurrencies (including Ethereum, Solana, Dogecoin, etc). Instead of focusing on a single coin, they diversify across top-coins.
- They are structured under the ‘40 Act regime, which is often preferred by professional investors because of stricter oversight, tax treatments, and structural features.
- This contrasts with many earlier crypto ETFs under the ’33 Act or other wrappers. The move signals maturation of crypto-financial products.
Why it matters
- Diversified crypto ETFs bring more options for investors who may want exposure to the asset class but dislike single-coin risk (e.g., pure Bitcoin or pure Ethereum).
- The ’40 Act structure can attract institutional and adviser-channel money that was previously hesitant.
- As more product options emerge, competition will likely increase and fee pressure may follow. More importantly, accessibility and liquidity may improve.
Considerations & challenges
- Diversified doesn’t mean risk-free: while spreading across coins reduces single-coin idiosyncratic risk, the crypto market still tends to move in tandem in major stress events.
- Fee structure: These ETFs carry fees (around 0.50% and 0.65% respectively) which are relatively modest but still need justification in terms of net-return.
- Market timing: Launching during a period of crypto market weakness (see earlier above) suggests product may face initial headwinds. Adoption rate, flows, and sentiment will matter.
- Underlying liquidity and indexing: The baskets include altcoins which may have less liquidity, higher spreads, and greater risk than large-cap coins.
What to watch
- How the ETFs perform in terms of inflows/outflows in the first 3-6 months.
- Whether advisers and asset allocators use these as (a) replacement for single-coin exposure, (b) portfolio diversifier, or (c) speculative allocation.
- Fee competition and product evolution: Will other firms launch similar vehicles with lower fees or more innovative structures?
- Impact on altcoin market liquidity: The baskets may influence price flows in the included coins.
Takeaway
21Shares’ launch of U.S.-listed crypto index ETFs marks a meaningful step toward mainstreaming crypto exposure via diversified, institutional-friendly vehicles. While this does not eliminate crypto’s innate risks, it offers additional pathways for investors. As always, investors should understand the product, underlying coin mix, fee structure and how it fits into their overall portfolio strategy.