FalconX Acquires 21Shares to Launch Derivative-focused Crypto Funds and Enhance Institution Derivatives Offering

FalconX, an institutional cryptocurrency prime broker based in the United States, has agreed to acquire 21Shares, renowned as one of the biggest managers of exchange-traded products (ETPs) for digital assets.

FalconX & 21Shares Agreement Outlook

In a deal that took place on Wednesday, an agreement was reached to combine the ETP expertise and distribution network of 21Shares with the trading and prime brokerage infrastructure of FalconX. The two firms are keen on launching derivative-focused and structured crypto funds, which aim to develop products different from the ordinary spot exchange-traded products. However, as of this writing, the financial terms of the agreement are yet to be disclosed.

Increasing Competition in Crypto Funds

The successful debut of spot Bitcoin and Ethereum ETPs indicates the opening of a fresh competitive front. Asset managers and trading firms are in a tough race to offer investors increased accessibility to smaller tokens, staking strategies, and derivative exposures via regulated wrappers.

21Shares’ Pioneering Crypto Products

21Shares is widely recognized for its portfolio of ETPs and single-asset products. It commands more than $11 billion in assets across Bitcoin and Ether ETPs with token-specific and basket offerings in Europe and other jurisdictions. This offers FalconX with well-established distribution networks and product engineering capabilities. The acquisition comes after recent efforts by FalconX to expand into institutional derivatives. Just last month, the firm introduced a 24/7 over-the-counter options platform that supports Bitcoin, Ethereum, Solana, among other tokens.

U.S. Regulatory Climate Fuels Industry Deals

In recent times, business transactions within the industry have sped up, thanks to a more accommodating U.S. regulatory environment. Notable deals include Coinbase’s acquisition of Deribit for $2.9 billion; Kraken’s recent purchase of Small Exchange to increase US derivatives capabilities; Kraken’s prior agreement to acquire NinjaTrader for $1.5 billion, and Coinbase’s agreement to acquire crypto investment platform, Echo for roughly $375 million.

Final Thoughts

The acquisition of 21Shares by FalconX signifies the expansion and rapid growth of the crypto industry. It shows the increased interest and confidence of traditional financial institutions in the thriving crypto market, further propelling its mainstream acceptance. As the industry continues to evolve, many expect more significant partnerships, mergers, and acquisitions. Disclaimer: This article is provided for only informational purposes. It is not intended or designed to serve as legal, tax, investment, financial, or any other form of advice.