Switzerland’s, SIX Swiss Exchange, has approved its first crypto exchange-traded product (ETP) with the ticker “HODL.” Investors in the recently approved Amun ETP will hold a basket of cryptocurrencies, Bitcoin (BTC), Ripple (XRP), Litecoin (LTC), Bitcoin Cash (BCH), and Ethereum (ETH), that will meet the requirements and criteria set forth by the investment firm. SIX Swiss Exchange is set to list the crypto-based ETP next week.
Amun AG, based in Zug, Switzerland, has structured that the ETP’s five digital assets will comprise a certain market share, with Bitcoin accounting for nearly fifty percent of the ETP’s assets, and the rest taking up fractional values left over, XRP 25.4%, Ethereum 16.7% bitcoin cash 5.2% and Litecoin 3%. Amun’s co-founder and CEO, Hany Rashwan, stated that next week’s ETP is set up in a way to comply with the current policies surrounding traditional ETFs.
The Swiss startup stated:
“Unlike actual assets such as stocks or gold, an index doesn’t have its own price, but displays a value representing the prices of underlying group of assets according to its own specific calculation methodology. For example, S&P 500 is calculated by taking the sum of the adjusted market capitalization of all S&P 500 stocks and then dividing it with an index divisor, which is a proprietary figure developed by Standard & Poor’s.”
Switzerland’s approval of a crypto ETP by its principle stock exchange is a major move for the industry, it is actually not the first. The US market has already listed Grayscale Investment’s Bitcoin Investment Trust, that will allow investors to purchase an ETP that represent the value of BTC.
With this recent announcement, there has been a lot of buzz concerning how the US SEC will move on a Bitcoin ETF, however there should be some fundamental understanding behind the recent events, before the community jumps to conclusions. The first to note, is that the community is divided as to whether or not a Bitcoin ETF will help the ecosystem. While it is true that an ETF approval will bring in institutional investors, that may just lead cryptocurrencies along the same path that financial institutions have been controlling fiat currency. Those who are against or are just not interested in an ETF, generally feel that adoption by the mainstream will be the saving grace for the nascent industry.
In terms of those in the community who are excited at the potential of a Bitcoin ETF. should be made aware of the differences between an ETF and ETP. The first major point goes to the nature of an ETP being a collateralized debt security, not a fund, with the investors exposed to the credit risk of issuer. In the event of default of Issuer, investors are placed fourth in priority. In the case of Amun AG, the Index Sponsor, they are unregulated and are 100% owned by Amun Technologies Limited.
This move may bold well for the crypto industry, and this may help weigh in on the US SECs decision on the proposed Bitcoin ETFs.