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The Future of Crypto ETFs: An Interview with 21Shares CEO Hany Rashwan
Finixyta
October 01, 2024
In the ever-evolving world of cryptocurrency, Exchange-Traded Funds (ETFs) and Exchange-Traded Products (ETPs) are becoming increasingly popular. Recently, I had the opportunity to sit down with Hany Rashwan, the CEO of 21Shares, at the Token2049 conference in Singapore. We discussed the future of crypto ETFs, the state of the market in Europe and the US, and the growing importance of staking products. Let's dive into the insights he shared.
## Introduction to 21Shares
### Who is 21Shares?
21Shares is the largest ETP provider for cryptocurrencies in Europe. What many people don't know is that, together with ARK Invest from the US, they are also the third-largest Bitcoin ETF provider, right behind giants like BlackRock and Fidelity. This puts 21Shares at the forefront of the crypto ETF market.
### The Man Behind the Vision
Hany Rashwan, the CEO of 21Shares, is a visionary in the crypto space. His insights into the market and the future of crypto ETFs are invaluable for anyone looking to invest in this rapidly growing sector.
## The State of the ETP Market
### Growth and Expansion
Over the past 12 months, 21Shares has solidified its leading position in Europe, now holding a market share of approximately 42-44%. They have introduced new products based on established trends, such as the Telegram Toncoin, and others that are still in their early stages, like Sui. Additionally, 21Shares has expanded its reach to Australia and the Middle East, becoming the number one provider in these regions as well.
### Strategic Focus
When asked about a potential shift towards the US ETF market, Rashwan explained that while the US market has more capital, 21Shares is focused on market share and the growth of underlying assets like Solana, Ethereum, and Bitcoin. In 2023, they saw inflows of three billion US dollars. Their focus remains on Europe, the US, and other regions, with offices in New York and a strong presence in Switzerland.
## ETFs vs. ETPs: What's the Difference?
### Understanding the Terms
For those new to the world of crypto investments, it's important to understand the difference between ETFs and ETPs. ETFs are a type of ETP that tracks the performance of an underlying asset or index. ETPs, on the other hand, are a broader category that includes ETFs, exchange-traded notes (ETNs), and exchange-traded commodities (ETCs).
### Market Preferences
According to Rashwan, customers in Europe are less concerned with the label "ETF" or "ETP" and more interested in the structure of the product. Factors like physical backing, minimal tracking error, and third-party custody are crucial. In Europe, the ETP framework works well, especially in Switzerland, where ETPs are treated like exchange-traded commodities (ETCs).
## The Asian Market: Opportunities and Challenges
### Investment from Asia
21Shares has already seen significant investments from Asian investors, primarily through their Swiss operations. Hong Kong is an interesting market, but local regulations make it challenging to design and offer products that meet 21Shares' high-quality standards.
### Regulatory Hurdles
The regulatory environment in Hong Kong can be complex, making it difficult to offer products that are both cost-effective and compliant. Rashwan emphasized that 21Shares would only enter the Hong Kong market if they could offer a product that meets their stringent quality standards.
## The Importance of Staking Products
### What is Staking?
Staking is a process by which holders of a cryptocurrency lock their assets in a wallet to support the operations of a blockchain network. In return, they receive rewards, similar to interest on a savings account. Staking is becoming increasingly important in the crypto world, as it offers a way to earn passive income.
### 21Shares' Staking Products
21Shares has the largest global product range of yield-generating products, primarily through staking. They offer both staking and non-staking versions of Ethereum, catering to the needs of institutional investors who may not yet have approval for staking.
### The Future of Staking ETFs in the US
When asked about the possibility of staking ETFs being approved in the US, Rashwan was optimistic. While it's not happening yet, he believes it's only a matter of time. Many countries are gradually allowing staking, and the US is slowly moving in that direction. Rashwan is confident that staking ETFs will eventually be approved in the US.
## Practical Advice for Crypto Investors
### Stay Informed
The crypto market is notoriously volatile. Stay informed by following reputable news sources and industry experts. Websites like CoinDesk and CoinTelegraph are great resources for the latest news and analysis.
### Diversify Your Portfolio
Don't put all your eggs in one basket. Diversifying your portfolio can help mitigate the risks associated with market volatility. Consider investing in a mix of traditional and digital assets.
### Do Your Own Research
While it's important to stay informed, it's equally important to do your own research. Don't rely solely on the opinions of others. Take the time to understand the technology, the market, and the potential risks and rewards.
### Stay Calm and Carry On
Market volatility is a fact of life in the world of finance. Try not to get too caught up in the day-to-day price fluctuations. Focus on the long-term potential of the technology and stay committed to your investment strategy.
## The Future of Crypto ETFs
### Upcoming Developments
The future of crypto ETFs looks bright. As more investors become comfortable with the idea of digital assets, the demand for crypto ETFs is likely to increase. This will drive innovation and competition in the market, leading to better products and services for investors.
### Regulatory Clarity
One of the biggest challenges facing the crypto ETF market is regulatory clarity. As governments and financial regulators establish clear guidelines for the use of crypto ETFs, the market will become more stable and attractive to investors.
### Global Expansion
As 21Shares continues to expand its reach globally, the company is well-positioned to take advantage of new opportunities in the crypto ETF market. With a strong focus on market share and the growth of underlying assets, 21Shares is poised for continued success.
## Conclusion: Embracing the Future of Crypto Investments
The interview with Hany Rashwan provided valuable insights into the future of crypto ETFs and the state of the market in Europe and the US. As the crypto market continues to evolve, it's important to stay informed, stay calm, and stay committed to the long-term vision of a more efficient and secure financial system.
### Disclaimer
The information provided in this article is for educational and entertainment purposes only. It is not intended to be financial advice. Always do your own research or consult a financial expert before making any investment decisions.