Crypto trading firm FalconX to acquire crypto asset manager 21Shares

FalconX, a US-based institutional crypto trading and prime brokerage firm, has agreed to acquire 21Shares, one of the world’s leading issuers of crypto exchange-traded products.

The deal, which will be paid for using a mix of cash and equity, is aimed at creating a powerful new force in the fast-evolving digital asset investment landscape.

Both companies confirmed that the acquisition would combine their strengths to accelerate the development of innovative crypto investment products for institutional and retail investors alike.

FalconX’s bold move into ETFs

Founded in 2018 by Raghu Yarlagadda, FalconX has become one of the most influential players in institutional digital asset trading.

The company has reportedly processed more than $2 trillion in crypto trades for over 2,000 institutional clients.

By acquiring 21Shares, FalconX is stepping beyond its core prime brokerage and trading services and into the growing world of crypto exchange-traded funds (ETFs).

The acquisition gives FalconX a direct foothold in a segment that has rapidly gained traction since the approval of the first spot Bitcoin and Ethereum ETFs.

21Shares currently manages more than $11 billion in assets across 55 listed products, including single-asset and basket-based funds.

The firm, also founded in 2018, became well known for its partnership with Cathie Wood’s ARK Invest in launching one of the first US spot Bitcoin ETFs in 2024.

According to Yarlagadda, the merger marks a turning point in the structure of the crypto market.

“Bitcoin flows are now happening through what we call traditional wrappers, and that’s a fundamental shift in market structure,” he said, noting that the deal would allow the combined company to bring new investment products to market more quickly.

Regulated products set to define crypto’s next growth phase

The FalconX-21Shares merger comes at a time of accelerated deal-making across the digital asset industry.

Rising institutional demand, a friendlier US regulatory tone, and improving clarity from the Securities and Exchange Commission have all contributed to a wave of consolidation.

In September, the SEC introduced new listing standards for crypto ETFs, streamlining approval processes and encouraging more firms to enter the market.

That change has spurred competition among asset managers and trading firms eager to offer investors exposure to smaller tokens, staking strategies, and derivative-based products through regulated structures.

The success of Bitcoin ETFs has already drawn traditional giants like BlackRock and Fidelity Investments into the space, adding pressure on crypto-native firms to diversify their offerings.

The trend has also led to several large acquisitions this year.

Coinbase announced a $2.9 billion purchase of Deribit to expand its derivatives reach, while Kraken acquired Small Exchange and NinjaTrader in deals worth around $1.5 billion.

Ripple followed with a $1 billion acquisition of GTreasury, and Coinbase sealed a $375 million agreement to buy Echo, a blockchain fundraising platform.

For FalconX, the acquisition of 21Shares represents both a strategic expansion and a statement of intent.

The firm is not only entering the asset management space but also positioning itself as a full-service financial institution for digital assets.

With 21Shares’ established distribution network and regulatory experience, FalconX will be able to develop a broader range of ETFs, derivatives, and structured investment products aimed at institutions.

The move also aligns with FalconX’s broader ambitions. The company, valued at $8 billion after a $150 million fundraising round in 2022, is reportedly exploring a future initial public offering.

By integrating 21Shares, it gains new capabilities and visibility in regulated markets, strengthening its profile ahead of any public listing.

Yarlagadda confirmed that integration between the two firms would begin immediately, though no timeline was shared for the rollout of their first joint ETF.

He added that 21Shares’ operations would remain intact while FalconX expands its footprint across global markets.

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