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 merchandise (ETP).
The deal, which has an undisclosed sum, merges prime brokerage infrastructure with one of many largest crypto ETP issuers, making a vertical integration that would reshape how Bitcoin and Ethereum funds commerce and observe their underlying belongings.
The acquisition comes 5 weeks after the Securities and Trade Fee (SEC) eliminated the ultimate regulatory limitations 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 buying and selling 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 autos throughout U.S. and worldwide markets.
Russell Barlow, CEO of 21shares, said:
“Our purpose has been to make crypto investing obtainable to everybody via industry-leading exchange-traded merchandise. Now FalconX will allow us to maneuver sooner and develop our attain. Collectively, we’ll pioneer options that may meet the evolving wants of digital asset traders worldwide.”
Based in 2018 by Hany Rashwan and Ophelia Snyder, 21Shares operates the ARK 21Shares Bitcoin ETF (ARKB) in partnership with ARK Make investments 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 reminiscent of Solana, Avalanche, Chainlink, Polkadot, and XRP, in addition to multi-asset merchandise, together with the Crypto Basket 10 Core and the Bitwise Choose 10 co-branded fund.
FalconX’s acquisition of 21Shares main market mechanics
Built-in prime brokerage plus issuer management adjustments who touches the first market, how briskly threat flattens, and what hedging prices.
When the issuer routes creations and redemptions via a main providing credit score, securities lending, derivatives, and OTC liquidity beneath one roof, market makers can hedge with a decrease foundation, cheaper borrowing, and real-time cross-margining.
That compression within the threat premium embedded in quotes narrows secondary-market spreads and tightens NAV monitoring, significantly across the open and shut and through unstable periods.
Entry broadens as a result of extra corporations can act as approved individuals via the prime’s infrastructure.
Centralized onboarding, intraday financing, and straight-through in-kind workflows cut back minimal sensible creation sizes and the working capital sellers should commit.
Decrease operational friction means arbitrage triggers happen at smaller mispricings, pulling costs again to NAV extra rapidly and stabilizing premiums and reductions.
Stock and funding acquire effectivity. A main’s lending e-book and inside shopper flows can provide borrow for shorts and supply underlying cash for in-kind baskets, lowering hard-to-borrow squeezes that might in any other case widen spreads.
A single threat e-book, netting spot, perpetuals, and choices in opposition to primary-market circulation, permits sellers to pre-hedge blocks and internalize extra threat, thereby shrinking their footprint on public markets and limiting slippage for big orders.
Value discovery tightens throughout venues. With one counterparty coordinating OTC crosses, main creations, and trade 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 on the prime of the e-book throughout listings in Europe, the UK, and Hong Kong, and in-kind redemptions stop reductions from persisting during times of stress the place rules permit.
The combination carries structural guardrails. Info limitations and clear battle insurance policies stay important in order that the prime’s shopper circulation 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.
However tighter hedging prices, cheaper borrowing, sooner funding, and broader approved participant entry characterize the operational levers that vertical integration pulls to compress spreads and deepen liquidity.
