Cryptocurrency M&A surges 30x as niche companies go mainstream
21shares has spent years building its cryptocurrency franchise beyond Wall Street’s orbit. From Zurich, it launched exchange-traded products, giving European investors access to them Bitcoin and ether Long before the United States would let them.
Now, in Sell himself To FalconX — the major cryptocurrency broker backed by Tiger Global and Singapore’s GIC — the company is trading its independence broadly as cryptocurrencies move closer to the financial mainstream.
The deal underscores a broader shift: crypto professionals are entering traditional investment channels through regulated products. The FalconX-21shares deal is part of a broader boom. Cryptocurrency mergers and acquisitions topped $10 billion for the first time in the third quarter, up more than 30-fold from the previous year, according to Architect Partners.
For years, cryptocurrencies have been a stagnant M&A operation as they slowly recovered from the 2022 market crash under the glare of hostile regulators. Ten months after Donald Trump returned to the White House and transformed the Securities and Exchange Commission from an industry bogeyman into a key ally, the tables have turned.
Trump’s policies, and the deals they sparked, have changed the strategic calculus of companies like 21Shares. Regulatory hurdles have eased, and Wall Street stalwarts are starting to get into the cryptocurrency space — putting the onus on incumbents to build a competitive moat around themselves.
“The regulatory environment has finally allowed this to happen faster,” Russell Barlow, CEO of 21Shares, said in an interview, declining to reveal the size of the deal. Regarding the roadmap, “what we thought we could do in five years, we can now compress into two to three years.”
For most of the past decade, the company has managed to carve out a niche for itself in Europe, while US authorities banned spot cryptocurrency ETFs. Then, in early 2024, the SEC under then-President Joe Biden lifted that ban. Switzerland-based 21shares suddenly found itself competing in a much more crowded field.
Speed comes at a cost: the same regulatory clarity that enables deals also invites new competition. Low-cost Bitcoin and Ether ETFs overseen by giants such as Black Rock Inc. started and Fidelity have raised billions of dollars in inflows from investors, and now hold more than $173 billion in assets combined. BlackRock’s IBIT Bitcoin and its Ether ETF oversee $87 billion and $15 billion respectively, compared to a total of $11 billion for 21 stocks across more than 50 products.
As cryptocurrencies integrate into mainstream finance, companies like FalconX and 21shares are racing to remain competitive in an increasingly crowded field, according to Nate Geraci of NovaDius Wealth Management.
“We are seeing a huge rush in exchange-traded cryptocurrencies,” he said. “With new listing criteria, the floodgates are set to open, making this an ideal time for a deal like this.”
FalconX, founded in 2018 and valued at $8 billion in a 2022 funding round, announced earlier this year. Bought Arbelos Markets, is a trading company focused on cryptocurrency derivatives. Its capabilities in trading and finance now extend to product creation.
21Shares will retain its 100 employees and operate independently, with plans to launch 18 US funds this year and expand into the Middle East and Asia. FalconX and 21shares aim to design strategies that integrate digital assets into traditional markets and tokenize bonds and stocks — for example, using blockchain to settle trades, according to Barlow.
The FalconX-21shares tie-up is one of a series of multi-billion-dollar bets that are redrawing the industry map for cryptocurrencies, beyond exchange-traded products and brokerages. The deals completed this year include several multi-billion dollar transactions. Coinbase Global Inc. acquired on derivatives platform Deribit for $2.9 billion in May, while Ripple spent more than $2 billion to buy major broker Hidden Road and corporate treasury company GTreasury. Cryptocurrency targets have also attracted bidders from outside the sector, including one from CoreWeave Inc. $9 billion acquisition of Bitcoin mining company and data center operator Core Scientific Inc. In July.
“The standardization of cryptocurrencies is pushing companies to vertically integrate,” said Karl-Martin Ahrend, co-founder of digital asset investment bank Arita. “Market makers, custodians and infrastructure players are moving closer to the end investor as ETFs and regulation open new channels for institutional capital.”
Fend off the giants
Some cryptocurrency heavyweights have already moved to capitalize on the rebound in sentiment, going public to build cash and gain firepower. Circle Internet Group Inc., the issuer of the second-largest stablecoin, raised $1.1 billion in June, while exchange operator Gemini Space Station Inc. raised $425 million in September.
The question now is whether this wave of deals will be enough to fend off global banks such as… Goldman Sachs Group Company and Citigroup Inc. — and payment groups from tape Inc. to Revolut Ltd. – as they step in to exploit clearer regulation and growing demand for digital assets Offerings.
Traditional finance has scale and distribution on its side; Cryptocurrency companies have speed and technical depth. The window of opportunity for this advantage is narrow, and a merger may be their best opportunity to take advantage of it.
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