The Crypto ETP Landscape: Whats New

Recent developments involving Exchange-Traded Products (ETPs) suggest a pivotal evolution in digital asset management and regulatory adaptation across diverse geographical regions. This article dissects the latest movements in the crypto ETP sphere, led by industry giants like 21Shares and Valour, reflecting their strategic initiatives and regulatory interactions in Europe, Kenya, and the United Kingdom.

21Shares, a leading crypto ETP provider based in Zurich, has recently intensified its call for regulatory clarity from the European Securities and Markets Authority (ESMA). The firms lobbying efforts focus on the inclusion of crypto assets in Undertakings for Collective Investment in Transferable Securities (UCITS) funds. This initiative aims to address the regulatory fragmentation observed across the European Union where nations like Germany and Malta permit UCITS funds to incorporate crypto assets, while others such as Luxembourg and Ireland do not.

The lack of uniform regulations has caused substantial confusion among investors, complicating their ability to assess and compare investment options. According to 21Shares, this disparity not only impedes investor protection but also limits access to crypto investments through more secure and professionally managed avenues. The firm advocates for ESMA to establish clear, consistent guidelines for indirect exposure to cryptocurrencies across all member states, promoting a higher standard of investor protection and facilitating broader investment access.

Expansion in Kenya

In a significant move for the African digital asset landscape, Valour has partnered with the Nairobi Securities Exchange (NSE) and SovFi to launch Bitcoin, Ether, Solana, and Hedera ETPs, marking the first crypto ETPs on the NSE. Olivier Roussy Newton, CEO of Valour‘s parent company DeFi Technologies, highlighted the partnership’s role in enriching their product offerings and fostering both local and international investments in Kenya.

This development is a part of Kenya‘s progressive engagement with the regulatory framework for digital assets which began in November 2022. The country’s increasing interest in Web3 technologies and its collaboration with the Venom Foundation to establish a blockchain hub underscore its commitment to integrating digital innovation into its economic architecture. The introduction of digital asset ETPs by Valour signifies a pivotal step in Kenyas embrace of cryptocurrency and blockchain technology, potentially positioning the NSE as a central hub for digital asset investments in Africa.

New Offerings in the United Kingdom

Expanding its footprint to the United Kingdom, DeFi Technologies, through its subsidiary Valour Inc., has launched the Valour Ethereum Physical Staking ETP on the London Stock Exchange (LSE). This new product offers professional investors an opportunity to gain exposure to Ethereum and earn staking rewards, with the security of assets being held in cold storage by regulated custodians.

Designed as a non-leveraged, passive investment tool, this ETP simplifies the staking process and integrates digital assets with traditional financial mechanisms. It is exclusively available to professional investors, adhering to the UK Financial Conduct Authority‘s guidelines on crypto ETPs. The launch not only broadens Valour’s array of crypto-related investment products but also bridges the gap between traditional finance and the decentralized finance (DeFi) sector.

The recent activities of firms like 21Shares and Valour highlight a growing trend of crypto ETPs making inroads into mainstream financial markets, supported by an evolving regulatory framework. As these products continue to diversify and as regulatory bodies enhance their guidelines, the landscape for crypto investments is expected to become more accessible and secure for a broader audience. This evolution is a testament to the increasing integration of digital assets into the global financial ecosystem, promising significant implications for both investors and regulators in the near future.