- The Financial Times revealed this weekend that SIX, the manager and owner of the Swiss Stock Exchange, will reference a listed investment product backed by a cryptocurrency basket: Bitcoin, Ether, XRP, Bitcoin Cash and Litecoin.
- This financial instrument, which will be presented under the symbol “HODL5”, should be available next week.
- The SIX Swiss Exchange is the fourth largest stock exchange in Europe, with a total capitalization of 1.6 trillion dollars.
A cryptocurrency basket on the SIX Swiss Exchange
This is a first for Switzerland.
While the crypto-investors are still awaiting the approval of an ETF (index fund) on Bitcoin in the United States, it is a crypto-ETP that will soon be available on the SIX Swiss Exchange, the fourth largest stock exchange. Europe. This will be proposed by the startup Amun, which has recently obtained the green light from local regulators.
Exchange traded products (ETPs) are financial instruments traded on stock exchanges, whose price is backed by that of an underlying. For this Amun Crypto ETP, this will be a basket of cryptocurrencies.
The objective of this product, symbolized as “HODL5”, is “to track the financial performance of the best and most liquid crypto-assets by valuing them according to the market capitalization of 2050 and rebalancing them monthly to to ensure an accurate representation of the current crypto-active market “.
If these proportions evolve each month, this FTE was composed, when writing this article, of almost half Bitcoin (48.69%), more than a quarter of XRP (25.72%), as well as nearly a sixth of Ether (17.60%). The rest was divided into Bitcoin Cash (ABC chain) and Litecoin.
The Amun site also provides the performance of this indicator since the beginning of 2017:
An historic event
Hany Rashwan, CEO and co-founder of Amun, told the Financial Times that this financial product meets the standards for “other traditional quoted products that are widely used by investors.”
“Amun’s FTE will target institutional investors who can only invest in financial securities, but also those who do not want to manage the digital asset custody process. It will also provide exposure to savers who do not have access to cryptocurrency trading because of regulatory hurdles, “he said.
In September, Amun received prior approval from the SIX Exchange Regulation, the autonomous department of the platform responsible for enforcing market regulations. This “fintech” company was set up by a team of former bankers who want to offer investors the opportunity to bet easily on cryptocurrencies.
This is what the leader said last September when he mentioned the choice of Switzerland:
“After analyzing 23 exchanges and different territories around the world, we decided to move to Switzerland”
“We believe that Switzerland has the best jurisdiction for our operations. After launching our first products on the SIX Swiss Exchange, we expect to launch more products, but also to offer double quotes across other countries and other stock exchanges. “
The approval of the SIX Swiss Exchange is a historic event since no such product exists in the world – not even in the United States, where the Financial Constituent (SEC) is still reluctant to accept the first ETF ( an Exchange Traded Fund, which is also a FTE) on Bitcoin.
It should be noted that the SEC had motivated its last refusal, citing its reservations about the possibility of “preventing fraud and fraudulent practices and manipulation” and “protecting investors and the public interest”.
The third crypto-product offered on a stock exchange
This is, as in the case of the ETF that SolidX and Vanceck want to jointly launch, a financial product guaranteed by “real” cryptocurrencies. In other words, when an investor decides to buy it, Amun’s market makers will buy the underlying crypto-currencies, depending on the instrument-specific allocation. The company will take care of the conservation of these assets.
This is the third crypto-product referenced on a traditional exchange. The first two are Grayscale Investment’s crypto-indices and Coinshares’ Bitcoin and Ether trackers, both of which rely on different legal structures. HODL5 will be the first “Crypto-ETP” fully guaranteed by digital assets.
Note that Amun expects to charge an annual management fee of 2.5%. As long as it is a regulated financial security, pension funds should be able to invest some of their capital in this instrument.
On Twitter, many traders expressed their enthusiasm following this announcement:
For some observers, the arrival of this financial title could soon pave the way for that of a crypto-ETF in the United States:
Switzerland gives green light to first cryptocurrency ETP.
In the light of the ETF, this is nice.
Behind the scenes the work and progress just continues. #bitcoin
— Crypto Michaël (@CryptoMichNL) November 17, 2018
A point of view that Joseph Young did not share, however:
Switzerland crypto ETP is great, it allows investors to invest in crypto in a similar way as stocks.
But, the narrative that Swiss ETP would increase Bitcoin ETF approval probability is flawed.
For SEC, issue is finding real price of BTC that is reliable and can handle an ETF
— Joseph Young (@iamjosephyoung) November 18, 2018