Swiss stock exchange SIX, the fourth largest stock exchange in Europe with a market capitalization of $1.6 trillion, has followed up on its commitment made back in June of this year to open its doors to cryptocurrencies. With this announcement, it is about to list the world’s first crypto-based exchange-traded product (ETP).
Exchange-traded products (ETP) are a type of security that is derivatively priced and trades intra-day on a national securities exchange. ETPs are priced so the value is derived from other investment instruments, such as a commodity, a currency, a share price or an interest rate. Generally, ETPs are benchmarked to stocks, commodities or indices. They can also be actively managed funds. ETPs include exchange-traded funds (ETFs), exchange-traded vehicles (ETVs), exchange-traded notes (ETNs) and certificates. The ETP that is the most popular is the ETF, securities that track an index, commodity or basket of assets.
SIX, backed by Swiss startup Amun AG, will track Bitcoin, Ripple, Ethereum. Bitcoin Cash and Litecoin with Bitcoin representing about a half of the ETP’s assets. The break down is XRP 25.4 at percent 16.7 percent in Ethereum, with Bitcoin Cash and Litecoin acquiring 5.2 and 3 percent of the market.
Amun’s co-founder and chief executive Hany Rashwan is certain that as an ETF, the security complies with the same rigorous requirements of traditional ETPs.
Amun AG’s ETP is a branch of the UK based fintech company Amun Technologies who hinted at a crypto ETP last month. Thomas Zeeb, head of securities and exchanges at SIX, sees blockchain-based digital exchanges becoming the status quo within a decade citing cost-effectiveness as a game changer within brokerage, banks, and insurance.
In the US, ETFs have hit a brick wall after the US Securities and Exchange Commission (SEC) rejected at least eight proposals in August of this year. The hope is that at least one successful approval on ETF by the SEC would bring a tidal wave of institutional buyers to the market, picking up prices and moving Bitcoin in a long-awaited upward trajectory. For the hopefuls in the market, the track record so far isn’t good.
In August, XBT Provider AB, a subsidiary of CoinShares Holdings Ltd released an exchange-traded note (ETN) called Bitcoin Tracker One in Sweden. Ryan Radloff, CEO of CoinShares Holdings commented at the time:
“Everyone that’s investing in dollars can now get exposure to these products, whereas before now, they were only available in Euros or Swedish Krona. Given the current climate on the regulatory front in the U.S., this is a big win for Bitcoin.”
Experts are now suggesting that Bitcoin ETFs will be a “way bigger deal” than cash settlement Bitcoin futures contracts and a boon to the Bitcoin market moving forward. This move out of Switzerland’s “crypto valley” is seen as another step forward towards this end.
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