21Shares launches crypto index ETFs under SEC’s Act 40
Asset manager 21Shares has launched two cryptocurrency index exchange-traded funds (ETFs) regulated under the Investment Company Act of 1940, a structure that could boost investor confidence by subjecting the products to the same disclosure and governance rules that apply to traditional US investment funds.The new products — the 21Shares FTSE Crypto 10 Index ETF (TTOP) and the 21Shares FTSE Crypto 10 ex-BTC Index ETF (TXBC) — were announced on Thursday. Both offer broad exposure to digital assets by tracking FTSE Russell cryptocurrency indexes and holding a basket of the top crypto assets by market capitalization, rather than investing in a single token.Federico Brokate, 21Shares’ global head of business development, said that index funds have enabled investors to gain diversified exposure to traditional assets, particularly stocks. “The same principle applies to crypto investing,” he said. 21Shares has been highly active in the crypto exchange-traded product market and was recently acquired by FalconX for an undisclosed amount. The company will continue to operate independently under the FalconX umbrella.Related: SEC says proof-of-work mining does not constitute securities dealingThe significance of the Investment Act of 1940The Investment Company Act of 1940 is the regulatory framework that governs US mutual funds and most conventional ETFs, imposing requirements around custody and investor protections. This contrasts with the Securities Act of 1933, which is used for grantor trust structures that hold physical commodities — the model regulators have mainly applied to US spot crypto products to date.As Cointelegraph reported, the Securities and Exchange Commission (SEC) has already approved a crypto ETP under the ’33 Act — the Rex-Osprey Doge ETF, which launched in September.Until now, the SEC has mainly approved spot Bitcoin (BTC) and Ether (ETH) products under the ’33 Act, rather than as fully regulated, investment-company ETFs under the ’40 Act. Demand for crypto ETFs has been high since spot Bitcoin funds debuted in early 2024. BlackRock has led the pack: Its IBIT Bitcoin ETF amassed roughly $70 billion in assets under management within its first year and a half on the market.