Crypto Prime Broker FalconX to Acquire ETF Manager 21Shares: Report

The crypto industry is rapidly expanding amid rising adoption, with many firms engaging in mergers and acquisitions to enhance their services and offerings. The latest company on the list is the leading institutional crypto prime brokerage FalconX, which has entered an agreement to acquire the exchange-traded fund (ETF) manager, 21Shares.

According to a Wall Street Journal report, the terms are undisclosed. However, FalconX’s co-founder, Raghu Yarlagadda, disclosed in an interview with the media house that the acquisition was financed using a mix of cash and equity.

FalconX Acquires 21Shares

Launched in 2018, FalconX is valued at $8 billion. The institutional prime broker has facilitated over $2 trillion in crypto trades for at least 2,000 clients. On the other hand, 21Shares manages no less than $11 billion in assets across 55 exchange-traded products (ETPs) for its clients. 

21Shares has also issued crypto ETPs, including the ARKB, the spot Bitcoin ETF it launched last year in partnership with fellow asset manager, Ark Invest.

As a combined entity, FalconX and 21Shares will develop and launch crypto funds that focus on derivatives and structured products. Following the acquisition, FalconX is now considering an initial public offering (IPO). The broker’s latest move comes amid increased crypto adoption and improving regulatory clarity in the United States. This has led to massive inflows into ETFs.

“Bitcoin flows are now happening through what we call traditional wrappers, and that’s a fundamental shift in market structure,” Yarlagadda stated.

The Merger and Acquisition Wave

Since the inauguration of President Donald Trump, regulatory agencies have taken measures to ease the path to crypto innovation in the country. Last month, the Securities and Exchange Commission (SEC) approved a new framework that reduces the listing process for crypto ETFs. 

The agency implemented a generic listing standard that allows crypto funds to operate under a widely used commodity-based trust framework. One of the perks of this move is that intending ETF issuers will no longer submit 19b-4 proposals when trying to get regulatory approval for their products. 

Yarlagadda believes the combined business with 21Shares will be able to bring products to market faster, especially with the increasingly favorable state of crypto adoption in the U.S.

Meanwhile, other firms that have been recently involved in acquisitions include crypto exchanges Coinbase, Kraken, and the blockchain infrastructure provider, Ripple. So far this year, Coinbase has acquired at least five companies, including the on-chain fundraising platform Echo.