In a recent episode of “Behind the Ticker,” Federico Brokate, Head of U.S. Business at 21Shares, shared insights into the firm’s approach to digital asset ETFs, including their products ARKB (Spot Bitcoin ETF) and CETH (Spot Ethereum ETF). Having joined 21Shares three months ago, Brokate brings a wealth of experience from his ten-year tenure at BlackRock, where he focused on U.S. ETFs. 21Shares, headquartered in Zurich, is dedicated to making digital assets more accessible through innovative products and has been rapidly expanding with over 50 products in 16 global markets.
About Federico Brokate and 21Shares
Brokate explained that 21Shares was founded in 2016 with a clear mission to bridge the gap between traditional finance and digital assets. The company’s founders, inspired by their mothers’ interest in Bitcoin, realized there was no easy way for retail investors to access digital assets without understanding the complexities of wallets, keys, and encryption. This led to the creation of 21Shares’ digital asset ETPs, which now offer institutional-grade products in both Europe and the U.S.
Investment Strategy and Approach
Regarding the current digital asset landscape, Brokate highlighted the tremendous success of Bitcoin ETFs, noting that digital asset ETFs, including 21Shares’ ARKB, have become some of the fastest-growing ETFs in history. He emphasized the importance of educating advisors and clients, particularly in the wealth advisory and institutional spaces, where interest in digital assets is rising but knowledge gaps remain. He mentioned that a significant portion of digital asset ETF holders are retail investors, but interest from institutional investors and wealth advisors is growing steadily.
Brokate also discussed the operational aspects of 21Shares’ products, explaining that both ARKB and CETH utilize a multi-custodial model with custodians like Coinbase, Anchorage, and BitGo to reduce single points of failure and ensure robust operational security. He noted that 21Shares is the only issuer currently offering this level of transparency, allowing investors to verify the holdings of each product through a partnership with Chainlink, which provides proof of reserve technology. This transparency, combined with the firm’s experience in managing digital asset products, has positioned 21Shares as a leader in the space.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Federico Brokate covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
So maybe you can get a little bit more in the weeds there just out of my curiosity because I haven't done the research. So the team, I'm used to the traditional creator team process in a traditional ETF. So is it different in the Bitcoin space and then on top of that you mentioned multiple custodians? Is there what is the decision making on where it gets custodyed or is it all split evenly? Can you just go a little bit deeper there?
I think this was a part of the market that was very quick attention to these products and was a huge driver of demand and flows, especially in the first few obviously the first quarter, really of trading. And so we were fortunate to count with the strong client based from both the social side and from the retail side from the early days. Now, there's a lot of great successful Bitcoin products in the market today, but I think what we were able to do differently was really lead into that research capability that we've developed over the last few years and some of those educational content series that we have to help educate retail investors too.
Market Context and Positioning
First is explaining to the advisor why they should care inherently about Bitcoin in the first place, right? And I think what's you make the place for the need for an asset like Bitcoin? The second part of the conversation becomes much easier, which is, okay, if I add Bitcoin to my portfolio, the first thing they'll think about is the increase in volatility. But what does it do to my risk of just the returns on a full year basis, right?
And so, when I break it down into those three, we're seeing tremendous progress across all of them. You know, retail investors have been rapidly adopting these products in the early endings and we continue to see that. I think we're particularly excited about that because they're really the fire that has gone digital assets become mainstream as you will. So, we're around 75 to 80% of all digital or Bitcoin ETF assets are held by retail today. And so, when you think about that and comparison to the rest of capital markets, it's a quite the embrace, right?
And so when I think about who would be an early adopter for this product, it would really be that crypto native or that crypto adjacent crowd that was looking to provide this exposure to the portfolio. But perhaps because of the lack of staking, they stayed on the sidelines so far. And the third thing that I mentioned a little bit earlier was some of this macro point where, you know, if I look at QQQ for example, as a proxy for growth equity is especially in the US prices are largely moved sideways for the last few months, right?
Key Takeaways
- The company’s founders, inspired by their mothers’ interest in Bitcoin, realized there was no easy way for retail investors to access digital assets without understanding the complexities of wallets, keys, and encryption.
- He noted that 21Shares is the only issuer currently offering this level of transparency, allowing investors to verify the holdings of each product through a partnership with Chainlink, which provides proof of reserve technology.
- This transparency, combined with the firm’s experience in managing digital asset products, has positioned 21Shares as a leader in the space.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Federico Brokate highlights important considerations around crypto & digital assets. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of crypto & digital assets and fixed income discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Federico Brokate, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.