Federico Brokate

Federico Brokate is the head of the U.S. business at 21Shares, one of the largest crypto-focused ETP issuers in the world. Before joining 21Shares, Federico spent about 10 years at BlackRock focused on the U.S. ETF business. 21Shares was co-founded by Hany Rashwan and Ophelia Snyder, launched its first crypto products on the Swiss SIX Exchange in 2018, and now manages over 50 products across 16 global markets. Their U.S. partnership with ARK Invest produced ARKB, one of the first spot Bitcoin ETFs approved in the United States, alongside their spot Ethereum product CETH. On this episode, Federico joins Brad to discuss how crypto ETFs work, what makes 21Shares' operational setup different, and where the digital asset space is heading.

From BlackRock to Crypto's Frontier

Federico explains that 21Shares entered the crypto ETP space when products like this essentially didn't exist in the regulated financial world. The founders saw an opportunity in 2018 to bring institutional-grade crypto access to investors through familiar financial product wrappers. By the time the U.S. market opened for spot crypto products in January 2024, 21Shares had already accumulated six years of operational experience managing crypto assets in regulated formats across 16 markets. That operational history, Federico argues, is the firm's core competitive advantage.

The ARK partnership was strategic. Cathie Wood's team brought distribution muscle and brand recognition in the U.S. market. 21Shares brought crypto custody infrastructure, product structuring expertise, and years of operational track record. ARKB has consistently ranked among the top spot Bitcoin ETFs by AUM and trading volume since launch, and Federico points to the August 2024 market volatility (driven by Japan carry trade concerns and weak U.S. economic data) as a concrete proof point that the products operated exactly as designed during stressed conditions.

Multi-Custodial Model and Chain Link Transparency

Federico walks through the operational architecture that he believes differentiates 21Shares from competitors. The key innovation is a multi-custodial model. While most spot crypto ETFs rely on a single custodian (typically Coinbase), 21Shares uses three custodians for ARKB: Coinbase, Anchorage, and BitGo. The rationale is eliminating single points of failure. If one custodian has an issue, the assets are distributed across multiple institutions, reducing operational risk.

The second differentiator is transparency through blockchain verification. 21Shares partnered with Chainlink to provide proof-of-reserve that any investor can verify directly on the blockchain. You can go to Chainlink's website and see the exact Bitcoin held by each custodian for each 21Shares ticker. This level of transparency goes beyond what traditional financial products offer and addresses the trust deficit that has historically plagued the crypto industry. Federico sees these operational controls as essential for building the institutional confidence needed to expand the crypto ETF market.

Beyond Bitcoin: The Product Roadmap

While Bitcoin dominates headlines and flows, Federico says the product suite is expanding. CETH, their spot Ethereum ETF, opened a new investor base with a different investment thesis. Bitcoin is primarily positioned as digital gold, a store of value and hedge against monetary debasement. Ethereum is a programmable platform powering DeFi infrastructure, NFTs, and decentralized applications. The investment cases are distinct, and Federico argues both belong in a diversified portfolio.

In Europe, 21Shares already offers ETPs covering Solana, Polkadot, and multi-asset crypto baskets. Federico expects the U.S. market to follow a similar trajectory as regulators become more comfortable with the asset class and the operational infrastructure proves itself over multiple market cycles.

On the advisor adoption question, Federico acknowledges that crypto's volatility creates allocation challenges. His recommended framework is simple: even a 1-5% portfolio allocation to crypto can meaningfully improve risk-adjusted returns because the asset class is largely uncorrelated to traditional stocks and bonds. He shows advisors that Bitcoin's correlation to equities is actually negative in some periods, and positions it as a hedge against inflation, monetary debasement, and geopolitical risk. The key is sizing the position so the volatility is manageable at the portfolio level.

Key Takeaways

• 21Shares launched one of the world's first crypto ETPs in Switzerland in 2018 and now operates 50+ products across 16 global markets. ARKB (with ARK Invest) is among the top U.S. spot Bitcoin ETFs by AUM.
• The multi-custodial model uses three custodians (Coinbase, Anchorage, BitGo) to eliminate single points of failure, a setup unique among U.S. spot crypto ETFs.
• Chainlink proof-of-reserve allows any investor to verify exact Bitcoin holdings on the blockchain in real time, providing transparency beyond traditional financial products.
• Even a 1-5% crypto allocation can improve portfolio risk-adjusted returns due to low correlation to traditional assets. Bitcoin is positioned as a hedge against inflation and monetary debasement.
• The U.S. product roadmap is expected to follow Europe's trajectory with Ethereum (CETH already live), Solana, and multi-asset crypto baskets as regulatory comfort grows.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.