anjir abdul
Crypto asset manager 21shares sees actively managed exchange-traded products as the next crucial phase of crypto investing, signaling a significant evolution as the market matures beyond simple price-tracking funds and embraces more sophisticated strategies to capture value in a dynamic landscape. This strategic shift reflects a growing demand for nuanced investment vehicles that can navigate the inherent volatility and rapid innovation characteristic of the digital asset space.
Duncan Moir, president of 21shares, articulated this vision in an exclusive interview with Cointelegraph, emphasizing that crypto, as a nascent and rapidly expanding asset class, is uniquely well-suited to active management. Unlike more established asset classes where market efficiency often makes it challenging for active managers to consistently outperform passive indices, the crypto market’s relative immaturity, information asymmetry, and high volatility present fertile ground for skilled managers to generate alpha. Active management, in this context, can leverage deep research, timely rebalancing, and strategic positioning to capitalize on market inefficiencies and mitigate risks more effectively than a static, index-tracking approach.
Moir detailed the company’s robust methodology, which combines rigorous bottom-up research on individual crypto assets with sophisticated quantitative and discretionary top-down strategies. This dual approach allows 21shares to manage risk effectively and strategically position portfolios. Bottom-up research involves deep dives into individual blockchain projects, assessing their fundamental technology, use cases, adoption rates, developer activity, tokenomics, and competitive landscape. This granular analysis helps identify undervalued assets or emerging trends before they become widely recognized. Complementing this, their top-down strategies incorporate macroeconomic factors, market sentiment analysis, regulatory developments, and broader industry trends, using both quantitative models for pattern recognition and discretionary insights from experienced portfolio managers to make informed allocation decisions. To underpin this sophisticated approach, 21shares has been proactively expanding its portfolio management and trading teams, bringing in diverse expertise to support the development and execution of more intricate and sophisticated products. "We’ve had to hire and build out the team with people who have different trading and portfolio management expertise, but now we have a solid team and we think we’ll be able to deliver strong actively managed products," Moir affirmed, highlighting the significant investment in human capital.
The global financial landscape has already witnessed a substantial shift towards active ETFs in traditional markets. Active ETFs worldwide held nearly $1.8 trillion in assets by the end of 2025, according to data compiled by Morningstar and Goldman Sachs Asset Management, underscoring a clear trend of investors seeking more dynamic solutions. This momentum in traditional finance provides a strong precedent for the potential growth of actively managed crypto ETPs, as investors increasingly appreciate the benefits of actively managed funds, such as potential for outperformance, risk mitigation, and flexibility in responding to market changes, all within the efficient and transparent structure of an ETF. The confluence of traditional finance’s embrace of active ETFs and crypto’s inherent characteristics creates a compelling case for this next phase of digital asset investment products.
Further accelerating 21shares’ product development pipeline, particularly as the company ventures into more complex offerings, is its integration with FalconX. FalconX, a leading institutional prime brokerage for digital assets, acquired 21shares in October, a strategic move that significantly enhances 21shares’ capabilities. FalconX’s robust infrastructure, deep liquidity pools, and advanced trading technologies provide 21shares with unparalleled execution capabilities and a broader toolkit for constructing and managing sophisticated crypto ETPs. This synergy allows for faster time-to-market for innovative products and provides the operational backbone necessary to handle the intricacies of active management in a highly fragmented and volatile market.
Moir also shed light on the intriguing regional differences in demand for crypto ETPs and ETFs. He noted a clear divergence: "The interest is still concentrated in the larger coins in the US. In Europe, institutional clients are more interested in newer assets and the application layer beyond the layer-1s." This disparity can be attributed to several factors. In the United States, the regulatory environment for crypto is still evolving and generally more cautious, particularly regarding altcoins, which has led to a focus on Bitcoin (BTC) and Ether (ETH) in approved ETPs. Conversely, Europe benefits from a more established and clearer regulatory framework, such as MiCA (Markets in Crypto-Assets), which has fostered a more mature and adventurous investor base. European institutions, having often already gained exposure to Bitcoin and Ether, are now increasingly looking to diversify their crypto allocations into the burgeoning "application layer," which includes decentralized finance (DeFi) protocols, Web3 infrastructure, gaming, and other innovative use cases built on various blockchains. This indicates a deeper understanding and a more proactive pursuit of alpha generation within the broader crypto ecosystem among European institutional clients.
Against this backdrop of evolving investor preferences, 21shares recently launched an exchange-traded product in Europe linked to Strategy’s preferred stock (STRC). This innovative ETP offers investors exposure to a high-yield instrument tied to the company’s Bitcoin-focused capital strategy. Moir reported strong early demand across multiple regions for this product, underscoring a significant investor appetite for yield-generating assets that can be easily accessed through traditional brokerage platforms. This type of product represents a bridge between the high-growth potential of crypto and the income-generating strategies familiar to traditional finance, appealing to a broader spectrum of investors seeking both capital appreciation and recurring returns.
As the crypto ETP and ETF market continues its rapid maturation, issuers are indeed moving well beyond offering simple price tracking. The industry is witnessing the emergence of increasingly complex and sophisticated structures across both the US and European markets. This evolution reflects a growing understanding among product providers and investors alike that the crypto market offers opportunities beyond mere directional bets on asset prices.
One particular area that has gained considerable traction is staking. Staking is a process that allows investors to earn yield by locking up their crypto assets to help secure proof-of-stake blockchain networks, thereby participating in the network’s operations and receiving rewards in return. In a significant development in October, Grayscale introduced staking across its ETPs, making its Ether funds the first US-listed spot crypto ETFs to offer staking rewards. Grayscale further announced its intention to extend this feature to its Solana trust, pending ETP approval, signaling a broader integration of yield-generating mechanisms into mainstream crypto investment products. Building on this trend, asset manager BlackRock, a titan in the traditional finance world, launched a Nasdaq-listed Ethereum product in March that ingeniously incorporates staking. This fund combines spot Ether exposure with the added benefit of yield generation through staking, offering a compelling proposition to investors. The product demonstrated strong initial interest, recording an impressive $15.5 million in trading volume on its first day, highlighting the robust demand for such integrated solutions.
When evaluating potential new exchange-traded product launches, Moir explained that 21shares adheres to a stringent three-factor framework: internal research, client demand, and broader market trends. The company’s dedicated research team plays a pivotal role in identifying early opportunities, conducting deep dives into emerging technologies, protocols, and market segments. This proactive research often serves as the initial spark for new product ideas. Simultaneously, institutional feedback and direct client engagement are crucial in gauging actual market interest and validating the perceived need for a particular product. This ensures that new offerings are not just theoretically sound but also address real-world investor requirements. "The third is where we see trends going in the future," Moir stated, adding that this forward-looking perspective can lead to the development of either highly specialized, niche single-asset products or broader, thematic offerings, depending on the conviction derived from their comprehensive analysis.
Moir pointed to the company’s Bitcoin-and-gold ETP as a prime example of this thoughtful approach in practice. While recently cross-listed in London, this innovative product has been live for four years and, according to Moir, has consistently delivered some of the strongest risk-adjusted returns among European ETPs. From a portfolio perspective, the combination of Bitcoin and gold "just makes total sense," he added, citing its significant diversification benefits. Gold has historically served as a traditional safe-haven asset and an inflation hedge, often performing well during periods of economic uncertainty or currency devaluation. Bitcoin, while more volatile, shares some characteristics with gold as a scarce, decentralized asset, often referred to as "digital gold." Combining these two distinct yet complementary assets can create a more resilient and balanced portfolio, potentially mitigating downside risk while capturing upside potential from both traditional and digital stores of value. This strategic pairing underscores 21shares’ commitment to providing sophisticated investment tools that cater to evolving market dynamics and investor needs. The success of such a product validates their multi-pronged approach to product development, blending meticulous research with an understanding of client demand and a keen eye on future market trajectories. As the crypto market continues to mature, the emphasis on actively managed, strategically diversified, and yield-generating ETPs is set to define the next era of digital asset investing, with firms like 21shares leading the charge in innovation and sophistication.
