Who sets the price now? The $11B ETF design that could change BTC trading
FalconX’s acquisition of 21Shares on Oct. 22 will add prime brokerage to the crypto funding administration agency that oversees greater than $11 billion throughout dozens of exchange-traded products (ETP).
The deal, which has an undisclosed sum, merges prime brokerage infrastructure with considered one of the largest crypto ETP issuers, making a vertical integration that could reshape how Bitcoin and Ethereum funds commerce and observe their underlying belongings.
The acquisition comes 5 weeks after the Securities and Exchange Commission (SEC) eliminated the ultimate regulatory boundaries to identify ETFs tied to belongings past Bitcoin and Ethereum, opening pathways for Solana, Dogecoin, and different altcoin merchandise.
FalconX, valued at $8 billion in a 2022 funding spherical, has processed over $2 trillion in trading quantity and serves greater than 2,000 institutional shoppers.
The agency plans to mix its brokerage platform with 21Shares’ product lineup to speed up the adoption of digital asset funding automobiles throughout U.S. and worldwide markets.
Russell Barlow, CEO of 21shares, acknowledged:
“Our objective has been to make crypto investing accessible to everybody by industry-leading exchange-traded merchandise. Now FalconX will allow us to maneuver quicker and broaden our attain. Together, we’ll pioneer options that will meet the evolving wants of digital asset buyers worldwide.”
Founded in 2018 by Hany Rashwan and Ophelia Snyder, 21Shares operates the ARK 21Shares Bitcoin ETF (ARKB) in partnership with ARK Invest and the 21Shares Ethereum ETF (TETH), which enabled staking in 2025.
The agency’s European, UK, and Swiss exchange-listed catalog spans single-asset ETPs for tokens equivalent to Solana, Avalanche, Chainlink, Polkadot, and XRP, in addition to multi-asset merchandise, together with the Crypto Basket 10 Core and the Bitwise Select 10 co-branded fund.
FalconX’s acquisition of 21Shares main market mechanics
Integrated prime brokerage plus issuer management modifications who touches the main market, how briskly threat flattens, and what hedging prices.
When the issuer routes creations and redemptions by a first-rate providing credit score, securities lending, derivatives, and OTC liquidity below one roof, market makers can hedge with a decrease foundation, cheaper borrowing, and real-time cross-margining.
That compression in the threat premium embedded in quotes narrows secondary-market spreads and tightens NAV monitoring, significantly round the open and shut and through unstable classes.
Access broadens as a result of extra companies can act as approved members by the prime’s infrastructure.
Centralized onboarding, intraday financing, and straight-through in-kind workflows scale back minimal sensible creation sizes and the working capital sellers should commit.
Lower operational friction means arbitrage triggers happen at smaller mispricings, pulling costs again to NAV extra shortly and stabilizing premiums and reductions.
Inventory and funding acquire effectivity. A major’s lending e book and inside consumer flows can provide borrow for shorts and supply underlying cash for in-kind baskets, decreasing hard-to-borrow squeezes that would in any other case widen spreads.
A single threat e book, netting spot, perpetuals, and choices towards primary-market circulate, permits sellers to pre-hedge blocks and internalize extra threat, thereby shrinking their footprint on public markets and limiting slippage for giant orders.
Price discovery tightens throughout venues. With one counterparty coordinating OTC crosses, main creations, and alternate quoting, the secondary market depends extra typically on main mechanisms as an alternative of chasing futures or offshore liquidity.
That reduces monitoring error and improves depth at the high of the e book throughout listings in Europe, the UK, and Hong Kong, and in-kind redemptions forestall reductions from persisting during times of stress the place rules permit.
The integration carries structural guardrails. Information boundaries and clear battle insurance policies stay important so that the prime’s consumer circulate doesn’t favor the issuer’s merchandise or designated market makers.
Jurisdictional guidelines nonetheless govern whether or not in-kind mechanics, staking, or 24/7 home windows are in operation.
But tighter hedging prices, cheaper borrowing, quicker funding, and broader approved participant entry symbolize the operational levers that vertical integration pulls to compress spreads and deepen liquidity.
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