Who sets the price now? The $11B ETF design that could change BTC trading

FalconX acquisition of 21Shares on October 22 adds prime brokerage to crypto investment management firm overseeing more than $11 billion dozens of products traded on the stock exchange (ETP).

The deal, which has an undisclosed amount, combines the infrastructure of a prime brokerage with one of the largest issuers of crypto ETPs, creating a vertical integration that could reshape the way bitcoin and ethereum are traded and tracked.

The acquisition comes five weeks after the Securities and Exchange Commission (SEC) cleared final regulatory hurdles for asset-backed spot ETFs bitcoin and Ethereumopening ways for Solana, Dogecoinand other altcoin products.

Valued at $8 billion in a 2022 funding round, FalconX has processed over $2 trillion in trade volume and serves more than 2,000 institutional clients.

The firm plans to combine its brokerage platform with the 21Shares product line to accelerate the adoption of digital asset investment tools in the US and international markets.

Russell Barlow, CEO of 21shares, said:

“Our goal has been to make cryptocurrency investing accessible to everyone through cutting-edge exchange-traded products. Now, FalconX will allow us to move faster and expand our reach. Together, we will pioneer solutions that meet the evolving needs of digital asset investors around the world.”

Founded in 2018 by Hany Rashwan and Ophelia Snyder, 21Shares operates the ARK 21Shares Bitcoin ETF (ARKB) in partnership with ARK Invest and the 21Shares Ethereum ETF (TETH), which enabled bets in 2025.

The company’s listed European, UK and Swiss catalog includes single-asset ETPs for tokens such as Solana, Avalanche, Chain link, Polka dotand XRPas well as multi-asset products, including Crypto Basket 10 Core and Bitwise Select 10 co-branded fund.

FalconX acquisition of 21Shares primary market mechanics

Integrated primary brokerage plus issuer control changes who touches the primary market, how quickly risk settles and how much hedging costs.

When an issuer channels origination and repurchases through prime credit, securities lending, derivatives and OTC liquidity under one roof, market makers can secure lower basis, cheaper borrowing and real-time cross-margins.

This compression of the risk premium embedded in quotes narrows secondary market spreads and tightens NAV tracking, especially around the open and close and during volatile sessions.

Access is expanded as more firms can act as authorized participants through the primary infrastructure.

Centralized onboarding, intraday funding and direct in-kind workflows reduce the minimum practical creation sizes and working capital traders must commit to.

Lower operating friction means lower mispricings result in arbitrage triggers, faster price pullbacks to NAV, and stabilization of premiums and discounts.

Inventory and financing increase efficiency. A prime company’s loan book and internal client flows can lend to shorts and acquire the underlying coins for physical baskets, reducing hard-to-borrow pressures that would otherwise widen spreads.

A single risk book, spot netting, perpetuals and options against the flow of the primary market allow dealers to pre-secure blocks and internalize more risk, reducing their footprint in the public markets and limiting slippage of large orders.

Price discovery is being tightened across locations. With one counterparty coordinating OTC crossings, primary creation and exchange listing, the secondary market is more likely to rely on primary mechanisms instead of seeking futures or offshore liquidity.

This reduces tracking errors and improves top-of-book depth across listings in Europe, the UK and Hong Kong, and in-kind buybacks prevent discounts from persisting during periods of stress where regulations allow.

Integration carries structural railings. Information barriers and clear conflict policies remain essential to ensure that the client flow of a first-tier firm does not favor the issuer’s products or designated market makers.

Whether natural mechanics, staking or 24/7 windows are in operation is still governed by jurisdictional rules.

But tighter collateral costs, cheaper loans, faster funding and broader access by eligible participants are the operating levers that vertical integration pulls to compress spreads and deepen liquidity.