Institutions Get Regulated Access to dYdX Derivatives via 21Shares ETP

21Shares AG, a leading European provider of cryptocurrency investment products, has launched the first physically backed exchange-traded product (ETP) for dYdX, a decentralized derivatives exchange, marking a significant step for institutional access to the growing crypto derivatives market. The ETP, listed on the Swiss-based exchange SIX, is designed to provide investors with direct exposure to dYdX’s native token, DYDX, and is intended to serve as a transparent and regulated vehicle for institutions seeking to gain exposure to the derivatives segment of the crypto ecosystem.

The move comes as institutional interest in crypto derivatives continues to grow. Derivatives, which include perpetual contracts and futures, have gained traction as they allow investors to speculate on price movements without owning the underlying asset. dYdX, one of the largest decentralized exchanges for perpetual contracts, has attracted substantial volume, particularly from institutional and high-net-worth traders. According to on-chain data, dYdX’s monthly trading volume has exceeded $45 billion in recent months, reflecting a surge in demand for crypto derivatives in 2024.

By offering a physically backed ETP, 21Shares aims to bridge the gap between traditional finance and the decentralized finance (DeFi) sector. Unlike cash-settled ETPs, which may introduce tracking errors, this product is backed by the actual DYDX token, ensuring a more direct and transparent investment approach. This structure aligns with the increasing regulatory focus on transparency and asset-backed instruments within the crypto space.

The launch of the dYdX ETP is part of a broader trend of ETP providers expanding their product offerings to include tokens from DeFi and derivatives platforms. In the past year, 21Shares has introduced ETPs for several major crypto assets, including Bitcoin, Ethereum, and Solana, and this new product aligns with the firm’s strategy to cover a broader spectrum of the crypto market. Analysts note that such ETPs may help reduce the volatility risk associated with derivatives trading by offering a more stable and regulated investment vehicle.

The product’s listing on SIX, a regulated market, further underscores the growing legitimacy of crypto assets within traditional financial systems. As more investors seek exposure to crypto derivatives without directly managing the underlying tokens or navigating unregulated platforms, ETPs are becoming an attractive alternative. The dYdX ETP is expected to appeal particularly to asset managers and pension funds looking to diversify their portfolios with crypto-related assets in a more controlled manner.