3 months ago
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While the low trading volumes on 21Shares’ crypto ETNs might be a concern for some, the company remains confident that this is a temporary situation.
21Shares, a leading provider of crypto exchange-traded products (ETPs), has addressed the recent low trading volumes of its crypto exchange-traded notes (ETNs) on the London Stock Exchange (LSE). Through its spokesperson, the company stated that these low volumes are not surprising.
In a recent statement, the company explained that the digital asset market is still young and developing. As a result, trading volumes can be lower compared to more established markets like stocks and bonds.
This is especially true for niche products such as crypto ETFs, which are designed to track the performance of digital assets like Bitcoin (BTC) and Ethereum (ETH).
21Shares Unveils Four Crypto ETNs
Last month, the company launched four crypto exchange-traded notes (ETNs): 21Shares Bitcoin ETN, 21Shares Ethereum Staking ETN, 21Shares Bitcoin Core ETN, and 21Shares Ethereum Core ETN. These products were listed for trading on the London Stock Exchange (LSE) for customers in the United Kingdom.
However, the four investment products are limited to professional investors only, in compliance with the UK’s new regulations implemented by the Financial Conduct Authority (FCA).
Due to the restrictions on these products to certain types of customers, the crypto ETNs have not been able to attract as much investor interest compared to US crypto ETPs.
However, the company explained that the poor volumes align with expectations and are not a cause for concern.
“The trading volumes on LSE are low, which is in line with our expectations,” said 21Shares.
Reasons for Low Volumes
The company also disagreed with other industry executives who claimed the low trading volumes are due to a lack of institutional interest in the products.
“We disagree that it’s a lack of institutional or professional interest. We believe it’s more related to the fact that these investors have had access to these products for years on exchanges outside of the UK,” said the company.
21Shares pointed out several reasons why low trading volumes are not surprising, noting that market conditions play a significant role in product performance.
During periods of market uncertainty or regulatory changes, trading activity can slow down. Investors might adopt a wait-and-see approach until there is more clarity.
Additionally, the company noted that the Bitcoin and Ethereum ETNs are cross-listings of existing products, and professional investors are likely to trade on markets with the most liquidity, which, as of now, is Xetra.
Industry Reactions
Despite these explanations, some industry executives, such as Laurent Kssis, a board member of Issuance Swiss AG, still blamed the low trading volume on poor institutional demand.
According to him, large investors such as hedge funds, pension funds, and asset managers, who are mainly responsible for driving significant trading volumes in traditional financial markets, have not been participating in buying the LSE-listed products.
Another executive, Hector McNeil, attributed the low trading volume to LSE, noting that the exchange came late to the party.
Overall, while the low trading volumes on 21Shares’ crypto ETNs might be a concern for some, the company remains confident that this is a temporary situation.
