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New US crypto ETF launches remain on pause given the ongoing government shutdown.
This just means there’s more time to make sense of what the upcoming product wave will look like — and how the world’s largest asset manager will (or won’t) participate.
Being on the Digital Asset Summit stage in London last week with BlackRock’s Matt Kunke and 21Shares’ Mandy Chiu gave me a unique chance to explore the different product development approaches of a TradFi incumbent and a crypto-centric firm.
With the SEC offering generic listing standards around what crypto assets would be allowed in the ETP wrapper, Kunke noted: “There will probably be an asset manager that will launch everything that you can imagine that falls within this scope.”
It’ll be a “Cambrian explosion” of sorts, he added, alluding to the period of rapid animal diversification 540 million years ago (Google’s AI overview helped me with that).
A provider of 50 or so ETPs in Europe already, 21Shares (set to be acquired by FalconX) is among those that will indeed look to offer many similar access points for US investors. You’ll see the firm’s name peppered throughout this long proposals list shared by Bloomberg Intelligence analyst James Seyffart in August (and there have been plenty more filings since):
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Chiu said her team considers onchain data, tokenomics, risk and governance when choosing which crypto ETPs to file for. But there’s one thing above all.
“I would simplify it by saying there’s no difference between crypto vs. other asset classes,” she told me. “It’s about whether or not you have the investment case and are we ready to get behind it as an asset manager.”
But Kunke said BlackRock — which manages ~$13.5 trillion in assets — is not ready to commit to launching more spot crypto ETFs after its successful BTC and ETH product launches last year.
“It’s a client demand question,” he said, noting that his meetings with pro investors suggest demand is “overwhelmingly skewed toward bitcoin.”
Passage of the GENIUS Act and the narrative of ETH being “the institutional smart contract chain” has helped awareness of the second-largest crypto asset in recent months. But those asking about solana and XRP represent only “a very small fraction” of the investors/institutions BlackRock is speaking to, Kunke added.
“Given the relative size of [BTC and ETH] markets compared to some of the smaller ones, I think commercially we’re probably better off prioritizing and elevating those two main products from an education perspective and a marketing perspective,” the BlackRock exec said.
Chiu pointed out an interesting stat. AUM in US crypto ETFs is roughly 6% of the total crypto market cap. Meanwhile, assets in US equity ETFs are about 20% of the US equity market size.
“I’m not saying we’ll reach 20% anytime soon,” she said. “But it’s definitely moving toward that direction and there’re still huge pockets of investors who haven’t gotten in yet.”
BlackRock’s bitcoin ETF (IBIT) and ether ETF (ETHA) tout AUM totals of ~$90 billion and ~$16 billion, respectively. IBIT (with weekly flows shown below) is the fastest-growing ETF in history and recently cracked the top 20 in AUM.
So back to BlackRock’s decision to hold off on more crypto ETF filings, Kunke said: “I don’t think we’re at saturation. These are scarce assets with a lot of capital that still have barriers inhibiting that.”
The barriers are eroding though. An example, ironically, came the day of this panel discussion. On Oct. 15, Morgan Stanley started allowing its advisers to pitch crypto funds to any client (previously they could only do that for those with aggressive risk tolerances and $1.5 million or more in assets).
