Asset management firm 21Shares launches two cryptocurrency index exchange-traded funds (ETFs) under the stringent 1940 Investment Company Act framework. This move signals a shift toward traditional fund regulation for diversified digital asset investments, potentially boosting investor confidence through enhanced disclosure and governance rules.
The two innovative products—the 21Shares FTSE Crypto 10 Index ETF (TTOP) and 21Shares FTSE Crypto 10 ex-BTC Index ETF (TXBC)—debut on Thursday. Both track FTSE Russell cryptocurrency indices and hold baskets of top crypto assets by market cap, rather than single tokens. Consequently, they offer investors broad digital asset allocation options.
Federico Brokate, 21Shares’ global head of business development, points out: “Index funds enable investors to gain diversified exposure in traditional assets, particularly in equity markets. The same principle applies to crypto investing.”
21Shares remains active in the crypto exchange-traded product market, with FalconX recently acquiring the company for an undisclosed amount. The firm will continue independent operations under the FalconX group.
The Significance of the 1940 Investment Company Act
The 1940 Investment Company Act serves as the core regulatory framework for US mutual funds and most traditional ETFs, imposing strict requirements on custody arrangements and investor protections.
This contrasts sharply with the 1933 Securities Act, which primarily applies to grantor trust structures holding physical commodities—the model regulators have mostly used for US spot crypto products so far.
Cointelegraph previously reports that the Securities and Exchange Commission (SEC) approves a crypto ETP—the Rex-Osprey Doge ETF—under the 1933 Act, with the ETF launching in September.
So far, the SEC approves spot Bitcoin (BTC) and Ethereum (ETH) products mainly under the 1933 Act, not as fully regulated investment company ETFs under the 1940 Act.
Demand for crypto ETFs surges since spot Bitcoin funds debut in early 2024. BlackRock leads in this space: its IBIT Bitcoin ETF accumulates about $70 billion in assets under management in just a year and a half.
This regulatory evolution could indirectly enhance cryptocurrency mining profitability by attracting more institutional capital to digital assets, driving demand for efficient mining hardware.
