21Shares Launches Crypto Index ETFs Under SEC’s ‘Act 40’ Framework

• 21Shares launched two crypto index ETFs: TTOP and TXBC, tracking FTSE Russell crypto indexes.
• Funds are registered under the Investment Company Act of 1940 (’40 Act), adding stricter disclosure and custody rules.
• The ETFs hold a basket of top crypto assets for diversified exposure rather than a single token.
• 21Shares was recently acquired by FalconX but will operate independently.
• The move marks a shift toward traditional fund oversight for crypto products and may boost investor confidence.

Asset manager 21Shares has launched two new cryptocurrency index exchange-traded funds that use the stricter regulatory framework of the Investment Company Act of 1940. The funds — the 21Shares FTSE Crypto 10 Index ETF (TTOP) and the 21Shares FTSE Crypto 10 ex-BTC Index ETF (TXBC) — track FTSE Russell cryptocurrency indexes and hold a diversified basket of leading crypto tokens by market cap.

Registering these products under the 1940 Act subjects them to the same custody, governance, and disclosure standards that apply to traditional US mutual funds and ETFs. That includes tighter rules on how assets are held and reported, stronger investor protections, and more rigorous oversight. 21Shares argues that this approach brings crypto investing closer to conventional fund structures and can help investors access diversified digital-asset exposure within a familiar regulatory framework.

Federico Brokate, 21Shares’ global head of business development, said index funds have long helped stock investors gain broad exposure without picking single winners, and the same principle should apply to crypto. By tracking FTSE Russell indexes, the new ETFs aim to offer a simple way for investors to hold a mix of major tokens rather than concentrate risk in just one asset.

21Shares has been an active player in the crypto exchange-traded product space and was recently acquired by FalconX. The firm will continue to operate independently under FalconX’s ownership, maintaining its product roadmap and market focus. The launch of these ’40 Act ETFs follows a trend of merging traditional finance rules with crypto products, after the SEC approved several spot crypto ETPs under other structures earlier this year.

Until now, most US spot crypto products have been structured either as grantor trusts or as products relying on the Securities Act of 1933 — a model regulators used for many early spot crypto listings. The 1940 Act route represents a different path: fully regulated investment-company status with custody rules and periodic reporting standards. This may appeal to institutional investors and retail buyers who prefer products that match the oversight of conventional funds.

Demand for crypto ETFs has remained strong since the debut of spot Bitcoin funds in early 2024, with giants like BlackRock posting rapidly growing assets under management. The arrival of 21Shares’ index ETFs under the 1940 Act adds another option for investors seeking diversified crypto exposure under a familiar regulatory roof. It also signals growing acceptance by market participants of building regulated, index-based products that blend crypto exposure with traditional investor protections.

Final Thought

21Shares’ move to launch index ETFs under the 1940 Act is a meaningful step toward mainstreaming crypto investment products. By combining diversified crypto exposure with the governance and custody standards of traditional funds, these ETFs could attract cautious investors and accelerate the integration of digital assets into conventional portfolios.