21Shares: how the crypto platform works

The Cryptonomist interviewed Massimo Siano, Managing Director of Southern Europe at 21Shares.

How does 21Shares work for people who want to invest in crypto?

The mission of 21Shares is to build bridges to the cryptocurrency world, so as to make this asset class accessible to as many investors as possible, and it does so through the development of dedicated ETPs, as they are regulated, simple and safe. Moreover, these do not bring with them a whole range of additional issues that, instead, one would have to deal with in the case of direct ownership of cryptocurrencies (cybersecurity, custody, etc.). 

What’s more, the infrastructure can often be cumbersome and poorly understood when it comes to investing or trading directly. As a commonly used tool, as well as a medium familiar to most given that it has its origins in traditional finance, the ETPs of 21Shares can meet the needs of investors around the world, both retail and institutional, while complying with area-specific regulations. Currently, our products are available on 12 platforms, including SIX, Xetra, and Euronext, so potentially anyone has the ability to invest in them; all they need to do is contact a bank or broker they trust who has access to one of these venues.

Will we be able to get an ETF after all the rejections from the SEC?

Unfortunately, no one has a crystal ball, but we can certainly say that at 21Shares we will continue to work with regulators to find solutions that will benefit our clients and investors in general. In particular, we want the SEC and all other government agencies, US and elsewhere, to understand that the actions and mismanagement of an individual are not representative of the entire market, stressing that access to digital assets needs to be regulated.

What do you think about the future of crypto? What about blockchain?

Although cryptocurrencies are currently going through a complicated phase, we have always been and always will be convinced that crypto, blockchain technology, and all decentralized finance represent a revolution too big to disappear. Moreover, although we are in a “crypto winter,” we should never forget that it is at times like these that the digital asset market has seen very important leaps forward in terms of innovation occur. 

Examples of this are Bitcoin itself, which was born with the 2008 crisis, or the use cases of DeFi and NFTs, whose infrastructure was developed at times when there were market contractions. I think now is the time to push innovation, without panicking, so that the industry will be populated with a number of new products such as our ETPs for when old and new investors are ready to enter or re-enter this market. 

For example, last June we launched our Crypto Winter Suite, a range of products that are particularly well suited to bearish periods. 

At the heart of this, investors can find two ETPs, on Ethereum and Bitcoin respectively (CETH and CBTC), which are the least expensive in the world for their class, with a TER of 0.21%.

What are your thoughts on the collapse of FTX?

First, it is important to clarify that 21Shares does not have any direct exposure to FTX. That said, we do understand the repercussions that the collapse of it brings for the entire crypto universe; first and foremost, at the level of loss of asset value, but also in many other segments. 

Among these, it is essential to mention institutional investors, who, even though they may have witnessed the demonstration that the collapse of a platform does not imply the failure of decentralized protocols or blockchain technology, will be reluctant to invest or enter the sector in the coming months. 

However, the area that we believe is surrounded by the most uncertainty is that of regulation. Indeed, Bankman-Fried had been publicly lobbying in Washington, issuing its DCCPA, a regulation presenting standards that the cryptocurrency market should abide by so as to create more clarity and protect investors while awaiting actual federal regulation. The FTX bankruptcy represents the tombstone of this regulation, but unfortunately we still do not know how it will be replaced. 

At the moment, we can only hope that the authorities will finally adopt clear guidelines that do not punish DeFi for the mistakes of centralized finance. In this regard, one of the few positive aspects that can come out of this affair is increased use of “Proof of Reserve” programs, which attest to a sufficient amount of reserves and in line with balance sheets, along the lines of what Binance, Crypto.com, OKX and other centralized platforms have already done. 

At 21Shares, ever since the company was founded, we too have been publishing our financial data and audits, partly because of regulations in the countries where we operate.