Exchange-Traded Products (ETPs) have emerged as a popular and accessible way for investors to gain exposure to the dynamic world of cryptocurrency without the technical hurdles of direct ownership. This guide answers the most common questions about how these products work, their benefits, and the broader crypto landscape.
How to Invest in 21Shares Crypto ETPs
You can purchase our ETPs through your existing brokerage or bank custody account—no external digital wallet is required. Our products are listed on major exchanges like SIX Swiss Exchange, Deutsche Börse Xetra, and Euronext. Simply search for them using their ticker symbol, ISIN, WKN, or Valor number during the respective exchange’s trading hours.
Understanding the Product Structure
21Shares ETPs are open-ended, physically replicated debt securities. This means each product is fully collateralized by the underlying digital asset it tracks, ensuring a 1:1 backing. The actual cryptocurrencies are held securely in offline cold storage by industry-leading custodian banks. There is no foreseen expiration date for these products.
The investment minimum is the price of a single share, as they trade in whole units and not fractions.
Security of Underlying Assets
The security of the collateral is paramount. We employ a multi-layered security protocol for the underlying assets, which includes:
- Cryptographic security: Advanced encryption protects the assets.
- Offline cold storage: The majority of assets are held completely offline, disconnected from the internet.
- Multiple private keys: Access requires several private keys, distributing control and reducing single points of failure.
- Whitelisting of wallets: Only pre-approved wallets can receive transactions, preventing unauthorized transfers.
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Common Questions About Crypto ETPs
What is an ETP and How Does it Differ from an ETF?
An Exchange-Traded Product (ETP) is a collateralized debt security designed to track the performance of an underlying asset, such as a single cryptocurrency or a basket index. While they trade on an exchange just like an ETF, ETPs are structured as debt instruments issued by a Special Purpose Vehicle (SPV), whereas ETFs represent ownership in a fund of assets.
Pricing and Valuation
The Net Asset Value (NAV) per unit represents the fair value of the underlying crypto assets and is calculated daily. The market price is determined by supply and demand on the secondary market. While arbitrage activities typically keep the market price close to the NAV, temporary premiums or discounts can occur.
The underlying assets are valued on a pure crypto basis. Each ETP share corresponds to a specific, predefined fraction of a cryptocurrency, which is detailed in the product's Final Terms.
Fees and Costs
Management fees for 21Shares ETPs range from 0.21% to 2.5% per annum, depending on the specific product. This fee is accrued daily and factored into the product's NAV. Standard brokerage transaction fees will also apply when buying or selling shares, but these are charged by your bank or broker, not by 21Shares.
Broader Crypto Investment Questions
Is It Too Late to Invest in Crypto?
With global crypto adoption at approximately 5% of the world's population, the current level of penetration is often compared to internet adoption in the year 2000. If cryptocurrencies are poised to rebuild the fabric of the internet for value exchange, we are still in the early stages. Many believe the best time to start building an understanding and position is now.
Assessing Risk and Value in Cryptoassets
The crypto asset class is not monolithic; risk profiles vary dramatically between different assets.
- Bitcoin, as the oldest and largest cryptocurrency, is often viewed as a relatively stable store of value within the space, with its annualized volatility having decreased significantly over the past decade.
- Smart contract platforms like Ethereum and Solana operate in a more competitive environment but offer exposure to a broader ecosystem of decentralized applications.
Valuing these assets requires different approaches. Proof-of-Work assets like Bitcoin can be analyzed based on mining production costs, while Proof-of-Stake assets like Ethereum can be valued using discounted cash flow models based on network revenues. On a risk-adjusted basis, as measured by the Sharpe ratio, Bitcoin has outperformed traditional asset classes like the S&P 500 and gold over the past ten years.
Addressing Common Misconceptions
- "Crypto is only for criminals": Data from firms like Chainalysis shows that illicit activity constituted less than 0.30% of all crypto transaction volume in 2022. Public blockchains offer a level of transparency that often makes transactions more traceable than in traditional finance.
- "Crypto has no intrinsic value": Value is derived from utility and scarcity. Bitcoin's value is based on its digitally-proven scarcity and its emergence as a sovereign store of value. Ethereum's value is tied to its role as the economic fuel for a vast ecosystem of applications, similar to how one needs dollars to participate in the U.S. economy.
- "Blockchains are just databases": They represent a fundamental breakthrough in cryptography, enabling trustless consensus and solving problems like double-spending without a central authority, which led to entirely new use cases for digital money and programmable contracts.
Frequently Asked Questions
How can I buy 21Shares ETPs if I live outside Switzerland?
Our ETPs are listed on multiple international exchanges. If your bank or broker offers access to trading venues like SIX, Xetra, or Euronext, you should be able to purchase our products through your existing account.
What happens if the internet shuts down?
A global internet shutdown would cause catastrophic disruptions to nearly every aspect of modern life—electricity, commerce, communication, and security. In such an unprecedented scenario, the status of cryptoassets would be a secondary concern.
What is the safest way to store Bitcoin?
The safest method for tech-savvy individuals is self-custody using a hardware wallet (cold storage), which keeps private keys offline. For most investors, however, using a regulated custodian—like those backing our ETPs—offers a secure alternative. These custodians store assets in cold storage, provide insurance against theft, and ring-fence assets from the issuer.
Are cryptocurrencies a speculative bubble with no real use case?
No, they enable tangible use cases that are gaining traction. Bitcoin acts as an international hedge against wealth confiscation. Stablecoins facilitate near-instant, low-cost cross-border payments. Underlying technologies also support innovations in immutable data storage, digital identity verification, and new revenue models for artists via NFTs.
Can Bitcoin’s monetary policy be changed?
Bitcoin’s 21 million hard cap is encoded into its core protocol. Changing this supply limit would require a network-wide consensus hard fork, which is extremely unlikely as it would fundamentally damage Bitcoin’s value proposition as a predictable, scarce store of value.
What is staking in a crypto ETP?
Staking allows investors to earn rewards by participating in securing a Proof-of-Stake blockchain. Some 21Shares ETPs, like our Tezos and Solana products, automatically stake the underlying assets. A portion of the staking rewards (e.g., 75%) is accrued to the ETP’s NAV, providing an additional return stream for investors while the assets remain securely in cold storage.