21Shares' Ophelia Snyder on Being First to a Spot Bitcoin ETF

The race to launch a spot bitcoin ETF has been accelerating seemingly each day, with new players entering the field and making amendments to their applications to appease the SEC. 

In a recent interview on etf.com’s Exchange Traded Fridays podcast, Ophelia Snyder, president and co-founder of 21.co, the parent company of 21Shares, emphasized the importance of being the first issuer to gain approval for a spot bitcoin ETF from the Securities and Exchange Commission.  

Along with ARK Invest, 21Shares has the first application in the latest batch of bids to get a landmark ETF approved, followed by BlackRock, Fidelity and others. 

Being the first issuer of a spot bitcoin ETF would help establish an early market presence and can provide a significant boost to a company's growth trajectory. Snyder drew a comparison to futures products, where the first-mover advantage led to a significant difference in assets under management. 

“If you look at, for example, the futures products, the difference between the first market and the second market, it was a couple of days,” Snyder noted. “And I think ProShares has about $1 billion in assets, and the second place has less than $100 million.” 

ETF Structure Advantages 

In an interview with etf.com, Snyder shed light on the regulatory environment, the advantages of an ETF structure and the potential impact on the broader cryptomarket. 

While many industry analysts were thrown off by BlackRock’s bid for the spot bitcoin ETF, the entry of major traditional players into the crypto space did not surprise Snyder. She noted that institutional adoption has been growing steadily.  

"Institutional adoption in the space has been increasing now for years,” Snyder added. “So it's not terribly surprising that asset managers of that size are entering the space." 

The broader crypto market has been evolving as well. 

"What we've seen in the past few months, and what we're continuing to see as a lot of the work that people have put in in the last year, year and a half, since crypto has been a bit more bearish, are starting to see the light of day,” Snyder explained, noting advancements across the board from increased usage of more complex functions in bitcoin with things like ordinals and new protocols coming out. 

"The crypto market is materially different today than it was three years ago, two years ago, even one year ago. There are a lot of fundamentals in the market that are changing,” she explained. “This transformation, combined with the emergence of surveillance sharing agreements, has piqued the interest of the SEC in approving a spot bitcoin ETF.” 

Why Spot Bitcoin ETF? 

While the fast-evolving crypto landscape may suggest the spot bitcoin ETF is closer than ever, it’s worth asking why investors may want to opt for this ETF in the first place. 

Among advantages of the ETF wrapper, Snyder outlined various factors for retail investors, including the ease of integration with existing wealth managers and traditional financial infrastructure. ETFs also provide access to higher quality custody solutions and better insurance coverage. 

For institutions, outsourcing the management of crypto-specific infrastructure allows institutions to focus on their core competencies, similar to how traditional investors operate in other asset classes. 

Snyder noted that ETFs bridge the gap between traditional finance and crypto, opening up access and increasing overall market accessibility. This aligns with the original intention of ETFs, which was to increase access to various markets and asset classes. 

Education Component 

Education has been a cornerstone of 21Shares' approach to the U.S. market. Snyder emphasized the importance of building institutional knowledge and helping various stakeholders gain a deeper understanding of the crypto sector.  

“There's often an approach [that] crypto is wildly different than everything we've ever looked at before,” Snyder observed. “And in some respects it is, and in some respects, it isn't. So there's really an ability to build up that knowledge base and work with advisors, funds, other institutions to help them get comfortable and get into a position where they feel competent in the advice that they're giving their clients.” 

Reflecting on 21Shares' European experience, Snyder expressed hope that the U.S. market would reach a similar level of sophistication. In Europe, the company manages 37 different products covering numerous crypto assets, catering to diverse investor needs. 

Snyder noted that while surveillance sharing agreements signal “deeper integration of cryptomarkets” with traditional markets, it does not automatically mean a huge shift or that it will be likely to have a big impact on crypto adoption.  

She emphasized that regulatory clarity, achieved through consolidation among regulatory bodies, would play a pivotal role in driving market changes in the future. 

"I think the places where you will see more of those types of major catalysts is if we do get that regulatory clarity, I think you're going to see a lot of changes around that in the coming months and years, whether it's through the Coinbase lawsuit, the Grayscale lawsuits, some of the enforcement actions from the SEC, some of what's happening in Congress,” she noted. “Eventually, these pieces have to come together to provide that clarity and provide a much more consolidated view. I think that will help tremendously." 

[Editor’s Note: 21Shares is a portfolio company of ETFS Capital, the parent company of etf.com.]