Bitcoin News Today: 21Shares Bridges Traditional, Crypto Markets with 40 Act ETFs

21Shares, a leading issuer of cryptocurrency exchange-traded products (ETPs), has launched the first U.S. crypto index ETFs registered under the Investment Company Act of 1940 ("40 Act"), marking a significant regulatory milestone in the digital asset space. The 21Shares FTSE Crypto 10 Index ETF (TTOP) and the 21Shares FTSE Crypto 10 ex-BTC Index ETF (TXBC) offer investors diversified exposure to the top 10 cryptocurrencies, including Bitcoin, Ethereum, Solana, and Dogecoin, while adhering to the same regulatory framework as traditional ETFs.

The new ETFs, introduced in partnership with FalconX, aim to meet growing demand for regulated access to crypto markets, particularly among institutional and retail investors seeking simplified, adaptive exposure. TTOP tracks a broad basket of the largest cryptocurrencies, rebalancing quarterly to reflect market changes, while TXBC excludes Bitcoin to focus on smaller-cap altcoins.

Both funds charge fees of 0.5% and 0.65%, respectively, positioning them as cost-effective alternatives to single-coin ETFs.

"This is the first time investors can access a diversified crypto portfolio under the '40 Act structure, which is the gold standard for professional investors," said Duncan Moir, president of 21Shares. He noted that multi-coin ETFs may appeal more to financial advisers than the retail-driven single-coin products that dominated early 2024. The firm's move follows a broader industry trend of expanding beyond spot Bitcoin ETFs into index-based products, though Moir anticipates slower adoption due to complexity.

The launch comes amid a surge in regulatory clarity for crypto products, highlighted by the recent approval of the first XRP spot ETF by Canary Capital. However, 21Shares' offerings stand out as the first to leverage the '40 Act framework, which mandates stricter custodial and tax treatment standards compared to the 1933 Act, commonly used for riskier crypto vehicles. This distinction could attract institutional investors wary of regulatory uncertainty in the sector.

The market response has been cautiously optimistic. While Bitcoin ETFs like BlackRock's IBIT have seen record inflows, multi-coin crypto ETFs face challenges in a volatile environment. 21Shares' quarterly rebalancing feature addresses this by allowing portfolios to adapt to market shifts without requiring constant manual adjustments. The firm's collaboration with Teucrium Trading, which has experience with commodity-linked '40 Act funds, further underscores its focus on regulatory compliance.

As the crypto ETF landscape evolves, 21Shares' entry into index-based products signals a maturing market. The firm's ability to navigate regulatory frameworks while offering innovative exposure options could set a precedent for future offerings, particularly as competition intensifies among asset managers vying for a slice of the $140 billion in U.S. crypto ETF assets.