The world’s first crypto Exchange Traded Product (ETP) will be traded in the form of an ETF next week on Europe’s fourth largest stock exchange, the SIX Swiss Exchange. Bitcoin, Ripple and Ethereum will make up the bulk of the ETF.
SIX Siwss Exchange gives green light to crypto ETF
A crypto startup, Amun AG, has been given the go-ahead to list an index fund on a traditional exchange, according to Amun’s co-founder and chief executive officer Hany Rashwan:
“The Amun ETP will allow institutional investors, who are only allowed to invest in securities or who do not wish to establish custody for digital assets with cryptocurrencies, to invest in cryptocurrencies. It will also allow retail investors who currently have no access to crypto exchanges due to local regulatory barriers. “
Composition of the ETF
The fund monitors the largest cryptos for market shares and allocates assets accordingly. The current allocation is approximately half of the Fund’s volume in Bitcoin and approximately 30% in Ripple, which recently overtook Ethereum in second place.
They also launch Bitcoin Cash ABC and Litecoin. This makes it the world’s first listed fund with ripple, BCH or LTC.
Distribution of the Amun Crypto Fund, November 2018.
Switzerland pioneer in regulation of crypto
“After reviewing 23 different exchanges and regions around the world, we have committed ourselves to Switzerland,” Hany Rashwan said in September, before adding:
“We believe that Switzerland is the best jurisdiction for our head office and intend to introduce additional products as well as a dual list across other regions and exchanges after the launch of our first products on the SIX Swiss Exchange.”
We plan to launch an Index Basket ETP first; it allows investors to simply buy the market instead of trading in certain crypto assets, although we plan to continue to introduce specific trackers for each asset in the future.”
Crypto ETF gets the name “HODL”
The fund distributes the shares of various cryptos based on their performance in market capitalization rankings. When you buy the ETP, market makers buy the same amount of cryptos – depending on the distribution – and send them to a custodian bank for safekeeping.
Jane Street and Flow Traders, two specialized Market Makers, will act as Authorized Participants, traded under the ticker “HODL”.
This is Coinshare’s Bitcoin and ETH Tracker and Grayscale’s pink sheet products, the third cryptographic product listed on a stock exchange.
“HODL” becomes the first 1: 1 covered crypto-ETF
Both have different legal structures, with HODL being the first crypto ETF that, in legal terms, must be fully (1: 1) covered by cryptos.
Most of these different structures are described under the generic term of the ETPs. ETFs are the most popular among them because they basically buy the underlying asset without having to secure it, and delegate these aspects to the issuer and its partners.
In exchange, Amun charges an annual management fee of 2.5% for this passive investment, whereby you buy a collection of cryptos with a combined crypto market share of 75% by simply buying a security on the SIX Swiss Exchange.
Is the big money coming?
Being a security system, Europeans in particular could effectively buy cryptos through their pension portfolio. This means that pension funds may now be able to provide a small amount for diversification.
Will the hoped-for big money flow into the market, or is this just the first step in the right direction?
Image by Shutterstock
Virtual currency is in many countries not legal tender, or is not backed by the government, and accounts and value balances are not subject to consumer protections. The information does not constitute investment advice or an offer to invest.
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