The world’s first crypto Exchange Traded Product (ETP) is to start trading next week on Europe’s fourth biggest exchange, SIX Swiss Exchange, with a market capitalization of $1.6 trillion.
A crypto startup, Amun AG, has been given the green-light to list an index fund on a traditional stock exchange with Hany Rashwan, co-founder and chief executive of Amun, stating:
“The Amun ETP will give institutional investors that are restricted to investing only in securities or do not want to set up custody for digital assets exposure to cryptocurrencies. It will also provide access for retail investors that currently have no access to crypto exchanges due to local regulatory impediments.”
The fund tracks the biggest cryptos by market share and accordingly allocates assets. Currently they have about half on bitcoin and nearly 30% on Ripple which has recently overtaken ethereum to second position.
They further list Bitcoin Cash, the ABC chain, and Litecoin. Making this the world’s first stock exchange listed fund to include Ripple, BCH or LTC.
“After exploring this across 23 different exchanges and territories around the world, we settled on Switzerland,” said Hany Rashwan back in September before adding:
“We believe Switzerland to be the best jurisdiction for our base and intend, after launching our initial products on the SIX Swiss Exchange, to both launch additional products as well as dual-list across additional geographies and stock exchanges.
We plan on launching an index basket ETP first; it allows investors to simply ‘buy the market’ rather than trade specific crypto assets, though we plan on launching specific trackers for each asset in the future too.”
The fund automatically allocates crypto distributions based on their performance in market cap rankings. When you buy the stock, market makers buy the equivalent amount of cryptos – according to the distribution – and send it to a custodian for safe keeping.
Jane Street and Flow Traders, two specialist market makers, will act as authorized participants, with the index to trade under the ticker of HODL.
Making this the third crypto related product to be listed on a stock exchange after Coinshares bitcoin and eth trackers and Grayscale’s pink sheet products.
They both have different legal structures, with HODL being the first crypto ETP that legally has to be fully backed by turning the stock share into a crypto.
Coinshares’ Exchange Trading Notes (ETN) are technically an unsecured debt by the issuer, but they collateralize them with cryptos. While Grayscale’s products have sort of exploited a loophole that has some burdensome requirements like inability to sell for a year.
Most of these different structures are described under the umbrella term of ETPs. ETFs are the most popular of those because you’re basically buying the underlying asset without having to secure it, delegating those aspects to the issuer and their partners. No crypto ETF has yet been approved.
Amun charges a 2.5% yearly management fee for this passive investment where you buy a basket of cryptos that account for 75% crypto-market share by just buying a stock on SIX Swiss Exchange.
As this is a security, for Europeans especially they’d be able to effectively buy cryptos through their pensions portfolio. Meaning pension funds may now be able to allocate a small amount for diversification purposes.
Article updated to clarify this is an ETP rather than an ETF. The two are similar in this case as this legally has to be 100% collateralized, but there some slight differences.