Cryptocurrency exchange Crypto.com and crypto fund manager 21Shares have announced a strategic partnership aimed at bolstering the liquidity of 21Shares’ Wrapped Bitcoin product (21BTC).
Through the partnership, 21Shares will source liquidity from Crypto.com, which currently has around $2 billion in bitcoin under custody (according to CoinMarketCap).
“This partnership is a strong demonstration of how our exceptional liquidity can support the innovations of companies like 21.co and how Crypto.com is constantly aiming to better serve our existing customers,” said Eric Anziani, president and chief operating officer of Crypto.com.
‘Wrapped’ crypto tokens like 21Shares’ 21BTC are synthetic products that allow certain cryptocurrencies to operate on blockchains that they weren’t initially designed for.
Bitcoin’s coding, for instance, only allows it to be exchanged on its native blockchain.
By ‘wrapping’ a bitcoin with another product pegged to the price of bitcoin, it can be deployed on other blockchains with far greater utility, such as Ethereum or Avalanche.
These wrapped products are essentially a form of collateral that can theoretically be redeemed upon request.
To facilitate redemptions, wrapped crypto products must be sufficiently backed by actual bitcoin, which is held in custody by a third party.
Nasdaq-listed crypto exchange Coinbase Global Inc (NASDAQ:COIN) is the primary custodian for 21Shares.