21Shares AG, a Zurich-based company leader in cryptocurrency ETPs, has launched another 3 ETPs on the SIX Swiss Exchange. ETPs are investment instruments that passively track the performance of an index, currency or commodity, or a basket of these assets. The new 21 Shares products bring the range of ETPs in virtual currencies available on the Swiss market to 20 and to 80 the prices currently present in all European markets.
The three products are designated:
21Shares Polygon ETP, Ticker: POLY (ISIN CH1129538448)
21Shares Avalanche ETP, Ticker: AVAX (ISIN: CH1135202088)
21Shares ETP Algorand, Ticker: ALGO (ISIN: CH1146882316)
Massimo Siano, 21Shares head of Southern Europe, explains that “the company was the first, and still is the only one (except for something on Bitcoin alone, not on other cryptocurrencies), to issue ETPs on cryptocurrencies with physical replication, that is not through derivative instruments, to be traded on the stock exchange like normal securities, rather than through wallets and complicated procedures “.
Massimo Siano, responsible for Southern Europe of 21Shares
In three years 21Shares has grown a lot: at its debut on the market it aimed at a collection of 150 million euros while it quickly exceeded the billion and is now above the three. Now there are two offices, in Zurich and New York, with 88 people, while the company started with less than ten people (including Siano). But what does 21Shares essentially do? Siano says that «in the world there are now 2,000 cryptocurrencies, but it would be impossible to offer them all on the stock exchange. 21Shares’ job is to select the most promising ones ».
It may be interesting to explain how this selection occurs. It should be noted that “there are two types of cryptocurrencies: those that act as a store of value and those linked to” smart contracts “”. On those of the first type, the selection is superfluous, because 21Shares takes into consideration only one virtual currency, Bitcoin: «This cryptocurrency has earned a reputation over several years and it is not an immediate fact that some other one can support it. Since it has an emission constraint of 21 million, and so far 18.5 million have been issued, Bitcoin plays the same role of “store of value” in virtual finance as gold does in traditional finance ».
Instead, cryptocurrencies linked to “smart contracts” require careful selection. These are service contracts negotiated in virtual currency with the help of the blockchain; the more valid and detailed they are, the more likely they are to spread, also assuming the value of a medium of exchange; it is to diagnose the development potential of smart contracts and the specific professionalism of those who work at 21Shares.
A doubt: what if cryptocurrencies were short of breath, after the long boom due to 12 years of very low or negative rates and monetary injections by central banks? If easy money fails in the world, won’t virtual currencies be the first to pay for it? Siano explains why he thinks this is unlikely to happen: “Let’s take the example of America. With inflation currently at 6%, nominal rates should be brought to 6% just to have real rates equal to zero. To reach a real rate of, say, 2%, the nominal interest rate would have to be raised to 8%. In that case, everyone would sell cryptocurrencies to buy dollars. But I don’t think there is a central bank capable of taking this route, given the conditions in which the global economy finds itself. Such a move may not curb inflation but it would certainly lead to a recession. Not gonna happen. And an analogous discourse, adjusting the numbers, is valid for Europe ».
But Siano believes that even in the long term, when interest rates have to rise, cryptocurrencies will not suffer too much: «They constitute a technology of the type that in English is defined as“ disruptive ”, that is, capable of changing the market. With cryptocurrencies we are at the same point where we were with the Internet at the beginning of the 90s: we are at the beginning of a thirty-year development cycle ».