Ben Strack

<div id="highlights-block_62d7839ef1766" class="highlights">
 <ul>
 <li>The firm’s newest products allocate more assets to USD when bitcoin or ether volatility rises</li>
 <li>21Shares brought to market its Bitcoin Core ETP (CBTC) last month in response to the crypto market downturn</li>
 </ul>
 
</div>



Cryptocurrency-focused fund issuer <a href="https://cms.blockworks.co/tag/21shares/" target="_blank" rel="noreferrer noopener">21Shares</a> has introduced additional products vehicles designed for investors wary of the lingering bear market — focused on risk-managed exposure to the two largest digital assets.&nbsp;



The 21Shares S&amp;P Risk Controlled Bitcoin Index ETP (SPBTC) and the 21Shares S&amp;P Risk Controlled Ethereum Index ETP (SPETH) launched on the SIX Swiss Exchange, the company said Wednesday. 



The newest index-tracking products offer exposure to the respective assets, while targeting annual volatility of about 40%, via allocating more assets to USD when bitcoin or ether volatility rises, for example.



Both funds seek to replicate S&amp;P Dow Jones Indices’ benchmarks that control risk in a similar manner.&nbsp;



The financial services giant has been developing crypto indexing capabilities over the last two years “to help promote more transparency and facilitate access to this emerging technology-driven asset class,” Sharon Liebowitz, S&amp;P Dow Jones Indices’ senior director of innovation, said in a statement.&nbsp;



Bitcoin traded around $23,200 on Tuesday at 7 pm ET — up 13% in the past 30 days but down 66% from its all-time high last November. Ether stood at $1,530 at the time, a 36% jump from a month ago. The asset also peaked last November, hitting nearly $4,900.&nbsp;



“Although Bitcoin and Ethereum are two of the best performing asset classes of the decade,&nbsp; risk-averse investors are often wary of its price fluctuations,” Hany Rashwan, a 21Shares executive, told Blockworks. “We’re bringing down the volatility level on two of the most sought after cryptocurrencies, to make it more palatable for investors to enter the asset class comfortably and to give investors a smoother ride.”



The fresh listings come a few weeks after the company brought to market its <a href="https://cms.blockworks.co/21shares-vying-to-build-out-crypto-winter-suite/" target="_blank" rel="noreferrer noopener">Bitcoin Core ETP (CBTC)</a>, also in Switzerland — the initial product in its so-called crypto winter suite. Exchange-traded products (ETPs) are equivalent to ETFs in the US.&nbsp;



Rashwan dubbed the fund “the cheapest physically-backed ETP in the world” at the time.&nbsp;



CBTC is also set to lend a portion of the underlying crypto on a fully collateralized basis to offset operating costs once the product scales.&nbsp;



Rashwan said the firm is looking to roll out several additional products in the suite throughout the second half of the year.



“Our upcoming products will fulfill a variety of investor needs — whether that is offering ETPs at the lowest costs on the market for long-term strategic allocation, for shorter-term tactical allocation or in a more risk-controlled manner,” he said.



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21Shares Expands ‘Crypto Winter’ Product Lineup

<div id="highlights-block_62bcaeb209177" class="highlights">
 <ul>
 <li>New vehicle is set to lend a portion of its underlying crypto to offset operating costs</li>
 <li>WisdomTree executive says “we are not shifting our strategy amidst current conditions”</li>
 </ul>
 
</div>



Swiss crypto fund issuer 21Shares has launched the first in a planned series of offerings designed to help investors navigate an upside-down crypto market.



The asset manager brought to market the 21Shares Bitcoin Core ETP (CBTC) on the SIX Swiss Exchange on Wednesday. It’s an exchange-traded product (ETP), the equivalent to an exchange-traded fund (ETF) in the US.



With an expense ratio of 21 basis points, CBTC is set to lend a portion of the underlying crypto on a fully collateralized basis to offset operating costs once the product scales.



“The markets influence how we think about innovation and building new products,” CEO Hany Rashwan told Blockworks in an email. “Releasing CBTC, the cheapest physically-backed ETP in the world, was designed to offer investors a more comfortable entry point to access a critical asset class during a choppy market and helps them to optimize portfolio returns.”



21Shares is building additional bear market-friendly funds slated to launch in the second half. Such offerings would include lower-cost products for long-term strategic allocation, or others for investors after shorter-term tactical allocation or risk-controlled exposure.



Lara Crigger, editor-in-chief of investment research firm VettaFi, told Blockworks interest in bearish products is abundant.



<a href="https://cms.blockworks.co/proshares-to-launch-first-us-etf-thats-bearish-on-bitcoin/" target="_blank" rel="noreferrer noopener">ProShares launched an ETF</a> last week that aims to deliver the inverse of the performance of the S&amp;P CME Bitcoin Futures Index. The fund has grown to nearly $30 million in assets.



Though not a short product, 21Shares’ approach to offer long bitcoin exposure in an ETP with a relatively low expense ratio is attractive, Crigger said. She noted its “unique characteristic” to lend out the underlying bitcoin could bring down costs even more.



“If you believe that bitcoin is currently in a bear market, but that it will one day reverse and rebound, then &#8216;buying the dip&#8217; with a low-cost exposure like this particular ETP is a cost-effective way to stay invested and express that view,” Crigger said.



Rashwan said 21Shares investors are “holding strong and still creating inflows for the long game” — despite market turbulence. The firm notched nearly $30 million in new net assets since mid-May, as 21Shares’ Bitcoin ETP (ABTC) represented roughly 30% of the total.



<h3 class="wp-block-heading">Competitors focused on long-term outlook</h3>



Townsend Lansing, head of product at 21Shares competitor CoinShares, said the firm has not considered launching a product that uses yield to offset operating costs, as CBTC does.



He added that when examining yield products, the company looks for opportunities that offer yield beyond a reduction in the management fee. CoinShares launched physically backed Cosmos and Polygon ETPs that offer exposure to the underlying tokens, plus an additional 5% per year.



“We run a diligence process on all new launches that looks at the coin, the protocol, the founders and other risk metrics, which of course include current and past market dynamics,” Lansing told Blockworks in an email. “Having said that, we tend to take a longer term view with our product strategy, and would tend to be unswayed by shorter-term trends unless they change the risk analysis of the product being launched.”



Will Peck, head of digital assets at fund group WisdomTree, said the company always considers ongoing market conditions and trends when developing new products.



“However, we are fully focused on a long term outlook,” Peck said. “Despite what some are calling the &#8216;crypto winter,&#8217; our long term perspective is that there will be continued adoption of digital assets and technology over time, so we are not shifting our strategy amidst current conditions.”



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21Shares Vying To Build Out ‘Crypto Winter’ Suite

<div id="highlights-block_627d79a90e656" class="highlights">
 <ul>
 <li>The Nordic Growth Market exchange has halted trading for Valour’s Terra ETP</li>
 <li>LUNA’s weighting in crypto indexes has dropped along with the price</li>
 </ul>
 
</div>



Amid the price crashes of TerraUSD (UST) and Terra (LUNA) in recent days, ETP issuers are seeking to manage their exposures to the latter asset.



Switzerland-based asset manager 21Shares launched <a href="https://21shares.com/product/luna/" target="_blank" rel="noreferrer noopener">the world’s first Terra ETP</a> (exchange-traded product) in January on the SIX Swiss Exchange. CEO Hany Rashwan said in a statement at the time that the firm had been “very impressed” with [the Terra ecosystem’s] development and traction.



But the price of algorithmic stablecoin UST has sunk far below its targeted $1 peg in recent days — the Terra blockchain’s native currency, LUNA, which the 21Shares Terra ETP tracks, has fallen alongside it, dropping nearly 97% in the 24 hours to 4:30 pm ET Thursday.



21Shares ETPs are designed to provide one-to-one exposure to the performance of their underlying assets. If the price of LUNA drops to zero, so too will the fund, a 21Shares spokesperson told Blockworks.



“As LUNA experiences low prices and high volatility, it is likely that exchange spreads will continue to widen, which may ultimately lead to delisting on the part of the exchanges,” the representative said.&nbsp;



21Shares also offers indexes such as its Crypto Basket 10 ETP, which seeks to track the investment results of an index composed of the 10 largest cryptoassets by market capitalization. According to a fact sheet published on April 4, Terra made up 3.68% of the index. Terra is now close to 0% weighting, according to 21Shares’ website.&nbsp;



“Our indexed products are specifically intended to provide diversified exposure to a broad range of cryptos recognizing that digital assets, like traditional assets, can experience substantial volatility at times and that uncertainty is inherent in any investment,” the representative said. “We promise to meticulously monitor our products to ensure that they deliver the intended exposures and allow investors well-diversified exposure to this emerging, and sometimes volatile, asset class.”



DeFi Technologies subsidiary Valour <a href="https://valour.com/luna-etp/" target="_blank" rel="noreferrer noopener">launched a Terra ETP</a> on the Nordic Growth Market (NGM) in February.&nbsp;



Valour CEO Tommy Fransson said the Terra plunge has spurred “a difficult time” for the industry, noting that ETPs investing in the asset are taking a hit.



“The rapid decrease in price of Terra led to a halt on all trading by the [NGM] exchange,” he said. “We will continue to monitor the situation closely. Our primary focus is and always will be the investor and ensuring their autonomy to participate as their risk appetite allows.&#8221;&nbsp;&nbsp;



Will Peck, head of digital assets at asset manager WisdomTree, noted that many financial advisors seek to obtain diversified crypto exposure for clients. The firm <a href="https://cms.blockworks.co/crypto-index-primed-for-launch-as-financial-adviser-interest-grows/" target="_blank" rel="noreferrer noopener">created the RWM WisdomTree Crypto Index</a> in a way that minimizes the impact from volatility to any one cryptoasset, he added, such as LUNA.&nbsp;



The index offers exposure to layer-1 networks, layer-2 protocols, oracle networks, crypto indexing services, decentralized finance (DeFi) and the metaverse. Terra had a 7.5% weighting in the index, according to a fact sheet published on April 22. LUNA had a weighting of 0.17% on Wednesday.



“The index methodology and index committee overseeing the index construction focus on a process that considers cryptoasset use cases and importance to the crypto ecosystem,” Peck said. “LUNA, along with broader crypto market events and other cryptoassets, are assessed in that context, which is an ongoing process.”



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LUNA Crash Has ETP Issuers Sweating Their Exposure

<div id="highlights-block_627c2a44f0368" class="highlights">
 <ul>
 <li>Crypto investors have evolved from asking “superficial” questions to doing more “nuanced analysis,” 21Shares co-founder says</li>
 <li>The ETP issuer is seeking to expand its presence to the Middle East through Dubai</li>
 </ul>
 
</div>



Crypto-focused asset manager 21Shares has introduced two ETPs that give investors exposure to the nuts and bolts of DeFi.



The Switzerland-based company listed its Layer 1 ETP (LAY1) on the SIX Swiss Exchange on Thursday. The 21Shares DeFi 10 Infrastructure ETP (DEFII) is set to become available on the BX Swiss Exchange on May 18.



LAY1 tracks an index developed by index provider <a href="https://vinter.co/" target="_blank" rel="noreferrer noopener">Vinter</a> and includes the 15 largest, by market capitalization, layer-1 blockchains. There is a maximum weighting of 30% of an allocation per each blockchain, and rebalancing is conducted quarterly.



DEFII, which also tracks a Vinter index, focuses on DeFi (decentralized finance) applications and layer-1 blockchains — each segment representing half of the benchmark. The assets in both categories are ranked by market capitalization and likewise reweighted quarterly.&nbsp;



21Shares is the first issuer in Europe to launch an ETP (exchange-traded product) based on a DeFi index, according to the company. The products are available to investors across Europe, and 21Shares will look to cross-list them on additional regional exchanges.



The launches come as investors have shifted from “superficial” questions about crypto to more “nuanced analysis,” according to Ophelia Snyder, co-founder and president of 21Shares. Retail and institutional investors alike are after more diversification, she added.



<div class="wp-block-image"><figure class="aligncenter size-medium is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg" alt="" class="wp-image-21551" width="200" height="300" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=200 200w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=683 683w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=1365 1365w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=171 171w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=174 174w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=146 146w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=53 53w, https://blockworks-co.imgix.net/wp-content/uploads/2022/05/Ophelia-main-headshot-200x300.jpg?w=33 33w" sizes="auto, (max-width: 200px) 100vw, 200px" /><figcaption>Ophelia Snyder, 21Shares co-founder and president</figcaption></figure></div>



“We wanted to have products for people who were really interested in specific themes, but might not be going as deep on the relative performance of why Solana is better for high-frequency trading versus Ethereum versus something else,” Snyder told Blockworks.&nbsp;



21Shares has launched a handful of ETPs this year, such as products focused on Aave (AAVE), Chainlink (LINK) and Uniswap (UNI). CEO Hany Rashwan said earlier this year that <a href="https://cms.blockworks.co/21-shares-expands-crypto-etps/" target="_blank" rel="noreferrer noopener">the firm aims to support</a> what it considers to be the top 50 cryptocurrencies by year end. 



“We’re firm believers that you should be able to enter the crypto space in as many diverse ways as possible, very similar to what you can expect in commodities, equities or fixed income,” Snyder said.&nbsp;



The firm is also looking to expand geographically in the coming months.&nbsp;&nbsp;



21Shares recently launched the first <a href="https://cms.blockworks.co/first-australian-spot-bitcoin-ether-etfs-to-go-live-next-week/" target="_blank" rel="noreferrer noopener">spot bitcoin and ether ETFs in Australia</a> and hired Carl Hagerup to lead the company’s presence in the Nordics and Netherlands region.   



Snyder said that 21Shares is planning to establish a Middle Eastern foothold next month via Dubai — which <a href="https://cms.blockworks.co/dubai-is-the-latest-government-to-roll-out-crypto-law-set-up-regulator/" target="_blank" rel="noreferrer noopener">proposed its first cryptocurrency legislation</a> overseen by a new regulatory agency in March. More recently, Dubai’s crypto regulator said <a href="https://cms.blockworks.co/dubais-crypto-regulator-buys-land-in-the-metaverse-for-headquarters/" target="_blank" rel="noreferrer noopener">earlier this month</a> it would establish a virtual headquarters in the metaverse.



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