As first reported by the Financial Times, Switzerland’s primary stock exchange, SIX Swiss Exchange, has listed the Amun Crypto Basket Index ETP under the ticker HODL and trading begins tomorrow, Nov. 21, 2018. The crypto ETP will provide investors access to an index tracking the price of Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Bitcoin Cash (BCH), and Litecoin (LTC).
With the price of most cryptocurrencies continuing to slide as the crypto market sell-off which began last week continues, the listing of the Exchange Traded Product (ETP) is one of the few positive stories in crypto recently.
The Amun Crypto Basket Index ETP
The ETP from Amun, a London-based fintech firm, is maintained and administered by MVIS, which is the index business of VanEck. VanEck is an American investment firm that has been trying to get approval for a Bitcoin ETF in the U.S., which was delayed in August and is still under Securities and Exchange Commission’s (SEC) review.
The HODL crypto ETP is a debt security and not a fund. Although it’s similar in theory to an ETF, it’s regulated differently. The ETP is designed to track the overall price of the 5 largest crypto assets based on their 2050 market cap according to the indexes fact sheet.
Crypto assets within the index will have a maximum weight of 50% and a minimum weight of 3%, with weightings being adjusted monthly. Currently, bitcoin will carry a 49.7% weight, XRP with 25.4%, ethereum at 16.7%, bitcoin cash at 5.2% and litecoin at 3%. According to the listing of the ETP on SIX, trading will begin on Nov. 21, 2018, and will come with a management fee of 2.5%.
The purpose of this new crypto ETP is to broaden the reach of crypto assets to investors who haven’t been able to access those investments directly. Hany Rashwan the Amun Co-Founder and Chief Executive explained to the Financial Times:
Ongoing Saga of Crypto ETP and ETFs
When the Amun crypto ETP begins trading it will be one of the first products to be publicly traded to track the price of multiple cryptocurrencies in a single index. Other indexes of crypto assets such as Coinbase’s Crypto Index or the Bloomberg Galaxy Crypto Index (BGCI) are merely tools to help investors understand the overall movement of crypto markets but investors can’t invest in the indexes directly.
While there are products such as the Bitwise 10 Private Index Fund which provides investors with a means to get exposure to a basket of crypto assets, Amun’s crypto ETP will be the first such index to be traded on a public exchange.
In the U.S. the SEC has rejected one prominent bitcoin ETF proposal and had several others under consideration for some time. It appears as though it may not be until 2019 when more clarity is given to listing of crypto exchange-traded products or funds in the U.S.
The SEC is being cautious as ETPs and ETFs are products that can typically appeal to investors who want to gain exposure to a basket of assets or market without the need to understand each underlying asset individually. Given that the differences between many cryptocurrencies can be quite technical, many see a crypto ETP or ETF as a way to reach a broader investor base.
As the HODL crypto ETP begins trading on Nov. 21, 2018, it will be interesting to watch how much volume is traded. It could be telling as to how much pent-up demand there is for crypto assets from those who aren’t willing to go through the reasonably simple process of purchasing and storing cryptocurrencies themselves.