CoinShares has emerged as a leading European fintech innovator at the forefront of the digital asset revolution. Built on robust proprietary technology and a deep understanding of financial markets, the company has established itself as more than just a passive beneficiary of cryptocurrency price movements. Instead, CoinShares leverages its advanced infrastructure to deliver value across asset management, liquidity provisioning, and capital markets activities—positioning it uniquely within the evolving digital finance ecosystem.
With assets under management (AUM) reaching approximately $6.5 billion as of late 2021, CoinShares operates one of the largest and most sophisticated platforms for exchange-traded products (ETPs) in Europe. Its dual-engine business model combines high-margin fee income from ETPs with resilient gains from non-directional trading strategies, enabling the firm to thrive even during periods of market volatility.
Core Business Segments: Asset Management & Capital Markets Infrastructure
CoinShares’ success stems from two interdependent pillars: its digital asset asset management platform and its proprietary capital markets infrastructure.
Digital Asset ETP Platform
Launched in 2015, CoinShares introduced the first regulated Bitcoin ETP—XBT Provider Bitcoin Tracker—paving the way for institutional-grade exposure to cryptocurrencies. This early-mover advantage allowed the company to capture significant market share and charge premium management fees of up to 2.5% on its legacy single-asset trackers.
In response to growing institutional demand for secure, transparent structures, CoinShares launched CoinShares Physical, a new generation of ETPs backed entirely by physically held digital assets. These are safeguarded by Komainu, a regulated custodian jointly founded by CoinShares, Ledger, and Nomura. The use of bankruptcy-remote special purpose vehicles (SPVs) eliminates counterparty risk—a critical factor for pension funds and other risk-sensitive investors.
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The company continues to expand its product suite with physically backed ETPs for Bitcoin, Ethereum, Litecoin, and XRP, listed across major European exchanges including SIX Swiss Exchange, Xetra, and Euronext.
Proprietary Trading & Liquidity Provision
CoinShares Capital Markets (CSCM) is the technological backbone that powers both its own ETPs and broader market efficiency. Unlike traditional financial institutions, CSCM employs algorithm-driven, delta-neutral strategies to exploit market inefficiencies without directional exposure.
This includes:
- Liquidity provisioning on Nasdaq and other major trading venues
- Statistical arbitrage across centralized and decentralized exchanges
- Fixed-income activities such as digital asset reverse repos with hedge funds and family offices
Historically, CSCM has delivered consistent returns even during bear markets—generating £14.4 million in gains during FY18 despite a 73% drop in BTC price. This resilience underscores CoinShares’ asymmetric upside: it benefits not only from rising digital asset adoption but also from increased volatility.
Strategic Investments & Ecosystem Expansion
Beyond its core operations, CoinShares actively shapes the digital asset landscape through strategic equity stakes and partnerships.
Key investments include:
- 3iQ (9.96% stake): Canada’s leading digital asset manager, with which CoinShares co-launched BTC and ETH ETFs on the Toronto Stock Exchange.
- Komainu (£2.5m investment): A regulated digital asset custodian enhancing security and compliance for institutional clients.
- FlowBank (9.02% stake): A Swiss neo-bank integrating CoinShares’ tech stack to enable direct digital asset trading for retail and institutional users.
- Kingdom Trust (indirect 7.8% stake): A U.S.-based retirement account provider offering crypto custody services to over 125,000 accounts.
These investments extend CoinShares’ influence across custody, distribution, and banking—creating a vertically integrated ecosystem poised for long-term growth.
Market Outlook: The Rise of Digital Asset Adoption
Digital assets are transitioning from speculative instruments to mainstream investment vehicles. Institutional adoption—driven by macroeconomic trends like monetary expansion and declining trust in fiat systems—is accelerating.
CoinShares forecasts global portfolio allocations to digital assets will rise from ~1.0% today to 2.0% by 2025 and 2.5% by 2030. This implies a total market capitalization of $7.1 trillion by 2030, comparable to nearly two-thirds of gold’s current value.
Within this shift, European ETPs are expected to grow fivefold—from $7.6 billion in 2021 to **$40.3 billion by 2025—with CoinShares holding an estimated 54% market share** as of late 2021.
Why ETPs?
Compared to direct ownership, ETPs offer:
- Simplified tax and accounting treatment
- Seamless integration into traditional brokerage accounts
- No need for self-custody or private key management
- Regulatory oversight and transparency
As such, ETPs are becoming the preferred gateway for institutional investors entering the crypto space.
Innovation Roadmap: From Single-Asset to Multi-Asset Products
While early success was driven by Bitcoin and Ethereum trackers, CoinShares is now focusing on next-generation financial products:
- Yield-bearing ETPs: Leveraging staking mechanisms to generate passive income from proof-of-stake networks.
- DeFi Exposure Products: Offering diversified access to decentralized finance protocols.
- Multi-Asset Indices: Through the CoinShares Gold and Cryptoassets Index (CGCI)—developed in collaboration with Imperial College London—providing risk-managed exposure combining gold and digital assets.
These advanced products command higher management fees (1.0–1.5%) compared to commoditized single-asset ETPs, helping offset fee compression over time.
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Financial Performance & Valuation
Despite accounting distortions due to FRS 102 treatment of digital assets, CoinShares’ underlying performance remains strong.
| Year | Revenue (£m) | Adjusted EBITDA (£m) | Adjusted EPS (£) |
|---|---|---|---|
| 2020 | 18.4 | 22.1 | 0.28 |
| 2021e | 78.1 | 109.0 | 1.51 |
| 2022e | 72.0 | 79.9 | 1.08 |
Source: Edison Investment Research estimates
Adjusted EBITDA margins have consistently exceeded 65%, reflecting operational efficiency and scalable technology infrastructure.
A discounted cash flow (DCF) analysis suggests a fair value of SEK120.3 per share, representing approximately 60% upside from current levels. Even under a “crypto winter” stress scenario—assuming an 85% market drawdown—the estimated fair value remains above today’s price at SEK78.4.
Leadership & Vision
Founded in 2013 by veterans of commodities trading—including Jean-Marie Mognetti (CEO), Daniel Masters, and Russell Newton—CoinShares applies lessons from the rise of commodities as an investible asset class to the digital era.
Their "Three Ds" thesis explains the long-term drivers of digital asset adoption:
- Demand: Utility beyond speculation (e.g., DeFi, NFTs)
- Depletion: Bitcoin’s halving mechanism limits supply growth
- Dollar Deterioration: Loss of confidence in fiat due to expansive monetary policy
This strategic foresight has enabled CoinShares to stay ahead of regulatory, technological, and market trends.
Frequently Asked Questions
What makes CoinShares different from other crypto firms?
Unlike pure-play exchanges or mining companies, CoinShares combines asset management with proprietary trading infrastructure. This dual-revenue model provides resilience during downturns while capturing upside from adoption.
How does CoinShares generate profits when crypto prices fall?
Through its capital markets division, which uses non-directional, algorithmic strategies that benefit from volatility rather than price direction—similar to market makers earning spreads regardless of trend.
Are CoinShares’ ETPs safe for institutional investors?
Yes. The CoinShares Physical platform uses regulated custodians (Komainu), physical backing, and bankruptcy-remote SPVs—meeting stringent institutional requirements for risk mitigation.
Will management fees continue to decline?
Yes, but gradually. While single-asset ETP fees may compress toward 0.5%, multi-asset and yield-generating products will maintain higher margins, moderating overall fee erosion.
What role does regulation play in CoinShares’ strategy?
Regulatory clarity—such as the EU’s MiCA framework—supports mainstream adoption. CoinShares proactively engages with regulators and designs compliant products, positioning it favorably as oversight increases.
How exposed is CoinShares to Bitcoin price swings?
Limited direct exposure. While AUM correlates with crypto prices, the company’s income is diversified across fees and trading gains, reducing reliance on any single asset’s performance.
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Final Thoughts: A Foundational Player in Digital Finance
CoinShares stands at the intersection of innovation, regulation, and financial engineering. As digital assets become embedded in global portfolios, companies with proven technology, diversified revenue streams, and institutional credibility will lead the transition.
With a clear roadmap for product innovation, strategic partnerships, and sustainable profitability, CoinShares is not merely riding the crypto wave—it’s helping build the infrastructure that will define finance in the decades ahead.
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