Twenty One Capital's Launch Announcement Was Met with Mixed Reactions

The unveiling of Twenty One Capital notably surprised both the TradFi and crypto space. This ambitious Bitcoin-native company, backed by industry giants and high-profile crypto enthusiasts

The announcement of Twenty One Capital last month sparked mixed reactions within the crypto community. While some saw it as another massive step toward institutional adoption, others grew weary that Bitcoin might fall victim to “Wall Streetization.”

To better understand the reasons for optimism and apprehension surrounding Twenty One Capital’s launch, BeInCrypto consulted with Matt Mena, a researcher at 21Shares, and Mati Greenspan, CEO of Quantum Economics.

Public Bitcoin Giant Emerges Amidst Mixed Reactions

The unveiling of Twenty One Capital surprised both the TradFi and crypto space. This ambitious Bitcoin-native company, backed by industry giants and high-profile crypto enthusiasts, immediately became a focal point of intense discussion and speculation.

Spearheading this new venture is Jack Mallers, the well-known Bitcoin advocate and CEO of Strike. He will reportedly lead Twenty One as its CEO.

Also, the company boasts significant financial backing from USDT issuer Tether and SoftBank Group, a global investment powerhouse.

Announcing Twenty One: https://t.co/zg4PVHidw2

Twenty One is a #Bitcoin-native company and the ultimate vehicle for capital markets to access #Bitcoin

We intend to leverage capital markets to maximize #Bitcoin ownership per share (BPS) & pioneer #Bitcoin-native financial tools pic.twitter.com/RixWzvcL1y— Twenty One (NYSE:TWTY) (@TwentyOne) August 1, 2023

Twenty One Capital is structured as a publicly traded entity through a business combination with Cantor Equity Partners. The company is expected to launch with a substantial Bitcoin treasury exceeding 42,000 BTC.

Its stated mission includes maximizing Bitcoin ownership per share, advocating for Bitcoin adoption, producing related content, and exploring the development of future Bitcoin-native financial products.

This news sparked a nuanced response, with excitement about Bitcoin becoming more mainstream alongside concerns about how institutional involvement might affect an asset designed to challenge traditional finance.

Institutionalizing Bitcoin: Opening Doors to Wider Investment

For those who have been closely following Bitcoin’s journey and rooting for its success, the formation of Twenty One Capital is a development that feels like the natural progression of events.

Major players like SoftBank and Tether’s involvement signify a collective shift in belief toward Bitcoin as a legitimate asset class. Some also see creating a publicly traded company with the sole focus on Bitcoin as a step that will further solidify its footprint in the market.

“The launch of 21 Capital doesn’t change Bitcoin’s core architecture or ethos– but it does highlight how institutional investors, such as Cantor Fitzgerald and SoftBank, who together manage hundreds of billions of dollars, are increasingly recognizing Bitcoin’s value as a neutral, non-sovereign asset in today’s shifting financial landscape,” said Mena.

By institutionalizing Bitcoin, Twenty One Capital will also open the asset to a broader class of investors.

Increased Liquidity and Access

Crypto advocates have consistently welcomed steps bringing digital assets closer to mainstream investors. Last year’s approval of Bitcoin and Ethereum exchange-traded funds (ETFs) marked a significant initial move in this direction. This development allowed traditional traders to gain portfolio exposure to these alternative assets without directly holding them.

The launch of Twenty One Capital will likely have a comparable impact. Establishing a large Bitcoin treasury within a publicly traded vehicle increases liquidity and provides traditional investors with a more accessible route to Bitcoin exposure.

Meanwhile, unlike firms that decide to allocate a portion of their assets to Bitcoin, the entirety of Twenty One Capital’s purpose is defined by this digital asset. This commitment could pave the way for developments that contribute to the Bitcoin ecosystem’s growth and health.

“Investment vehicles like 21 Capital, Strategy (formerly MicroStrategy), and the ETF wrapper arguably further Bitcoin’s original vision by democratizing access to finance. They help make Bitcoin exposure available to a broader base of investors—from institutions to everyday savers—without requiring direct crypto custody or technical knowledge,” said Mena.

Despite the valid points in these arguments, Tether and SoftBank’s significant backing presents several potential dangers.

Bitcoin’s Decentralized Traits are Inherent

When asked about the potential negative implications of Twenty One Capital on the Bitcoin network, Mena made a critical distinction between two key aspects.

He explained that Twenty One Capital would be a service built on top of the Bitcoin network. As such, any internal centralization within their operations wouldn’t alter the underlying decentralized nature of the Bitcoin protocol itself.

Individuals would still maintain the freedom to interact with Bitcoin directly in a peer-to-peer manner, as envisioned in its creation.

“It’s important, though, not to conflate institutional participation with control. Bitcoin remains decentralized— open, permissionless, and secured by a globally distributed network of miners and nodes. Entities like 21 Capital don’t alter the protocol or centralize the asset— they simply offer new access points that integrate Bitcoin into existing financial infrastructure,” said Mena.