On Nov. 16, Switzerland’s primary stock exchange, SIX Swiss Exchange, announced the listing of the world’s first multi-crypto-based exchange-traded product (ETP).
Exchange-traded products (ETP) are derivatively priced securities that are traded on a national securities exchange. The pricing derives its value from other investment instruments, most commonly found in the form of commodities, stocks, and indexes.
The first global multi-crypto ETP has the backing of Swiss startup Amun AG and will be listed under the ticker symbol HOLD. According to the announcement, the ETP will track five of the sector’s biggest cryptocurrencies: Bitcoin (BTC), Ripple (XRP), Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC).
Cryptocurrencies share in the HODL ETP
The announcement also reveals that each of the five cryptocurrencies will obtain a degree of the market share within the ETP, although Bitcoin will reportedly make up roughly half of the ETP’s overall assets. XRP, the now second-biggest cryptocurrency, will make up 25.4 percent of the assets, followed by Ethereum with 16.7, Bitcoin Cash at 5.2 percent and Litecoin with 3 percent.
In spite of many hopeful product launches across the crypto sector attempting to hasten mainstream adoption, regulation issues remain a serious and consistent barrier to progress. Hany Rashwan, co-founder and chief executive of Amun AG, has not overlooked this potential sticking point and maintains that the product will comply with the existing strict policies that apply to all other ETPs.
Amun’s official website states that SIX Swiss Exchange is Europe’s fourth-largest exchange and has a market capitalization of $1.6 trillion.
Coinshares caught the eye of billionaire crypto investor Mark Cuban early on. Speaking at the Vanity Fair New Establishment Summit in Los Angeles, Cuban commented on the investing experience and the ascription of asset value:
“It is interesting because there are a lot of assets which their value is just based on supply and demand. [With] most stocks, there is no intrinsic value, because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply-demand. I have bought some through an ETN based on a Swedish exchange.”
According to Bloomberg, COINXBE has total assets of 96.5 million euros and COINXBT has total assets of 986.3 million Swedish krona.
ETF BATTLE IN THE UNITED STATES
Perhaps the most established exchange-trading method in the crypto world is that of exchange-traded funds (ETF).
An ETF tracks a commodity, bonds, a stock index or one or several assets. Single-asset ETFs are now commonplace and can be used to trade a variety of assets, such as gold. As ETFs are already a major tool for passive investment in mainstream finance, many players in the crypto community hope that ETFs will pave the way toward widespread adoption.
Part of the allure of ETFs that track a basket of assets is that, by their very nature, they are less prone to the risk of fluctuations that other investment instruments are vulnerable to. Because the value of the investment is spread across multiple assets, losses from underperforming assets are counterbalanced by those that more rapidly accrue value. As a result of this, ETFs enjoy popularity among low-risk investors.
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