FalconX acquires 21Shares to expand ETF distribution
FalconX agreed to acquire 21Shares in a cash-and-equity transaction to build derivative-focused and structured crypto funds, WSJ reports. Financial terms were not disclosed and the companies did not provide a timetable for product launches.
The deal combines FalconX’s U.S. institutional prime-brokerage and trading platform with 21Shares’ distribution network and product engineering for exchange-traded products. Integration work will begin immediately, and FalconX plans to keep 21Shares’ operations intact while expanding distribution in regulated markets.
The combined business will develop funds that use derivatives and structured wrappers to provide access to staking strategies, token-specific holdings and derivative-based exposures that differ from plain-vanilla spot ETPs.
Raghu Yarlagadda, co-founder of FalconX, described the shift in market structure this way: 'Bitcoin flows are now happening through what we call traditional wrappers.' He added that the combined firm expects to bring products to market faster.
FalconX was founded in 2018 and has handled more than $2 trillion in crypto trades for institutional clients. The firm has expanded into institutional derivatives and recently launched an over-the-counter options platform. FalconX raised $150 million in 2022 at an $8 billion valuation and has been exploring an initial public offering.
21Shares, also founded in 2018, lists more than 55 exchange-traded products, ranging from U.S. spot bitcoin offerings to token-specific and basket ETPs. The firm partnered with ARK Investment Management to launch a U.S. spot bitcoin ETF in 2024.
Regulatory changes this year shortened review timelines for crypto ETFs, and the success of large spot bitcoin and ether ETFs has encouraged managers and trading firms to develop products for smaller tokens and structured exposures. The agreement follows other industry transactions as firms expand fund management and derivatives capabilities.
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