Switzerland-based cryptocurrency firm 21Shares is betting on proof-of-stake (PoS) coins by launching a new crypto exchange-traded product (ETP) dedicated to staking.
On Jan. 18, the company launched the 21Shares Staking Basket Index ETP, a crypto staking index designed to track up to 10 PoS cryptocurrencies. The ETP immediately starts trading on the local stock exchange BX Swiss under the ticker STAKE.
At launch, 21Shares’ STAKE ETP tracks six digital assets, including BNB (BNB), Cardano (ADA), Cosmos (ATOM), Polkadot (DOT), Solana (SOL) and Tezos (XTZ). The index will rebalance semi-annually in March and September, following market shifts.
With the addition of STAKE, 21Shares and its parent firm, 21.co, now provide 47 crypto ETP products across 12 exchanges in nine countries. The ETPs aim to provide investors with a safe and secure way to gain crypto exposure by offering an alternative to direct crypto investment.
“STAKE provides value for investors by using the ETP’s assets to generate a passive yield that may offer additional returns by contributing to the network’s security,” said Arthur Krause, director of ETP product at 21.co.
The launch of STAKE ETP comes a few years after 21Shares started experimenting with staking ETPs. In 2019, 21Shares debuted the 21Shares Tezos Staking ETP (AXTZ) and launched the 21Shares Solana Staking ETP (ASOL) in June 2021.
Both products experienced a significant decline in 2022, in line with the bear market. However, the ETPs have performed well in the first weeks of 2023, with year-to-date performance surging 38% for AXTZ and 78% for ASOL.
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Krause emphasized that assets like Solana — which is widely linked to the collapsed FTX exchange — have not had any impact on 21Shares’ products, stating:
“Solana — like virtually all other crypto assets — experienced significant price declines in 2022 but suffered no fundamental impairment that would preclude its inclusion in the index. "
STAKE’s launch comes after some major global regulators expressed concerns about cryptocurrency staking. In September 2022, the United States Securities and Exchange Commission chairman, Gary Gensler, argued that crypto staking looks “very similar” to lending, referring to massive failures in the crypto lending industry amid the bear market of 2022. Thailand’s Securities and Exchange Commission also banned crypto firms from offering staking and lending services in September 2022.
“To be clear, the 21Shares Staking Basket ETP does not engage in any lending whatsoever,” Krause emphasized. He added that staking is a crypto-native strategy allowing investors to pledge assets to support the process of validating blockchain transactions, whereas lending is a traditional financial strategy where lenders are compensated for the risk that assets they lend may not be returned.