CoinShares Execs: Retail Investor Interest Going Beyond BTC, ETH

While institutional investors continue considering products focused on the two largest crypto assets, CoinShares’ self-directed customers have become increasingly interested in alternative coins, firm executives said.

Though CoinShares is taking a measured approach to new products, the firm expects to bring exposures to more coins other than bitcoin and ether, including those that allow for staking.

“We’ve taken our time to ensure that we build and structure products that have longevity in this market,” CoinShares Chief Revenue Officer Frank Spiteri told Blockworks in an interview. “We’re not here to just get products out ASAP that won’t stand the test of time.”

Townsend Lansing, the London-based crypto investment firm’s head of product, noted that the firm has built its retail and institutional client base by first offering exposure to traditional coins.

CoinShares’ range of physical exchange-traded products (ETPs), which the firm launched in January, include offerings that invest in bitcoin (BTC), Ethereum (ETH), litecoin (LTC) and XRP – the native digital asset of the XRP Ledger, which aims to be a global payments system.

The four products have combined assets under management of about $600 million. CoinShares listed the bitcoin and ether funds in additional countries in September.    

The firm will focus on expanding its offerings through exposures to other assets in 2022, Lansing said, as well as provide education to investors. 

“We’re not just going to launch alts and have them out there,” the head of product noted.

“If staking’s possible, we’re going to look to how we can share those staking rewards with investors.”

CoinShares will also seek to build out its XBT Provider lineup with exposures to assets that can be lent out to earn additional yield. The firm currently offers bitcoin and ether tracker ETPs denominated in Swedish Krona and Euros.

In addition, the firm is considering ways to add to its slate of index strategies, the executives noted.

“A lot to come,” Lansing said. “We’re very much on the cusp of adding a bunch of new coins to the prospectus and launching a few new things, so it looks like it’s going to be a very innovative and exciting year for us.”

Who’s investing?

Most buyers of CoinShares’ products are self-directed retail investors, and that remains the biggest opportunity, Spiteri said.

Roughly 40% of the assets within the firm’s physical ETP range come from Switzerland. Assets in the XBT Provider funds are predominantly from retail investors in Sweden, the executive noted, though private banks also invest in those offerings.  

“The fact that this product was the first exchange-traded product that gave access to bitcoin and Ethereum and it was the only option that many of these private banks had, you see a big adoption globally for that product from the private banks,” Spiteri explained.

In terms of retail investors, the majority of the interest is beyond bitcoin and ether, Spiteri noted. 

Digital asset investment products suffered outflows of $142 million last week following 17 straight weeks of inflows, according to a CoinShares fund flows report published on Dec. 20. The outflows came at a time when there have been outflows across all risk assets following the Federal Reserve’s statement on tapering. 

A total of $89 million came out of bitcoin products, while Ethereum offerings had record outflows of $64 million. But alternative coins, such as Solana (SOL) and Polkadot (DOT), had inflows of $6.7 million and $2.5 million, respectively, the report states. Multi-asset investment products brought in $1.5 million. 

WisdomTree and 21Shares each launched a crypto exchange-traded product in the last month that excludes bitcoin and ether.  

Despite retail investors’ increased interest in altcoins, Spiteri said CoinShares’ conversations rarely stray from bitcoin and ether.

“We’re still some way from that institutional adoption en masse, and a lot of that is due to the internal situations where we see a huge amount of polarization within firms,” Spiteri said. 

“They’re still going through that process just to get bitcoin and potentially Ethereum as an asset class that they’re willing to invest in or can invest in.”

A new partnership

CoinShares partnered with Germany-based digital wealth manager and broker Scalable Capital earlier this month. The alliance allows Scalable Capital to offer its customers crypto ETPs alongside stocks and ETFs. 

Scalable Capital wanted to offer crypto trading backed by physical ETPs and contacted various crypto ETP providers, according to Spiteri.

“Based on the range of products we have, the range of products we’re planning to have, our pricing level, our research and our brand, they decided to work with us,” he said.

Called Scalable Crypto, the new offering developed through the partnership is backed by CoinShares’ physically backed ETPs.

“Cryptocurrencies have become an established asset class in a balanced portfolio,” Scalable Capital Co-founder Erik Podzuweit said in a statement. “CoinShares as our partner allows us to offer seamless access to crypto trading for our clients.”

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