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Cryptocurrencies, blockchain and ETFs – an update


News came last week that Swiss-based Amun had launched the 21Shares Short Bitcoin ETP (SBTC) on the Swiss Stock Exchange (SIX). This is an ETP which tracks the opposite performance of bitcoin to give investors access to hedging and trading potentials within bitcoin price movements, whichever direction they are going.

Amun, with USD50 million under management, describes their 21Shares Short Bitcoin ETP as a natural extension to their existing unleveraged range of crypto ETPs, allowing investors to better manage the increased volatility and changing dynamics of the cryptocurrency markets.

ETFs based on cryptocurrencies have been one of the biggest ambitions for ETF providers, but proved hard to crack. Writing in 2018, Crypto Fund Research said: “If 2017 was ‘the year of bitcoin’, 2018 is shaping up to be the year of the crypto fund.”

That was the year that Van Eck, SolidX and others had proposed the launch of ETFs based on bitcoin to the US’s SEC, only to be repeatedly knocked back.

2013 saw the launch of Grayscale Investments, one of those firms engaged, in their case in 2017, in attempting a crypto ETF launch. The firm describes itself as a digital currency only focused asset management business with USD2.5 billion in assets, which currently makes them the largest crypto asset management business in the world.

Michael Sonnenshein, Managing Director of Grayscale says: “The firm had its earliest incarnation in September 2013 as it was early to recognise that digital currency would be a bona fide asset class and investors would want exposure to it.”

In Europe, XBT Provider from CoinShares has USD654 million under management in its range of ETPs, and has just announced that ETF veteran Townsend Lansing, formerly at ETF Securities, is to join the firm as Head of Product for the group’s ETP business.

Amun is the latest to arrive on the crypto scene with its Swiss-exchange listed ETPs. 

WisdomTree’s founder and CEO Jonathan Steinberg 

has also confirmed its commitment to digital with a new initiative in blockchain, the protocol which underpins bitcoin, with an investment in Securrency, a developer of blockchain technology, and their launch of a bitcoin ETP in Switzerland. Steinberg confirms that these are all part of their work to orientate themselves to be leaders in digital assets.


Back to global news, and Stack, a Singapore-based provider of cryptocurrency trackers and index funds has recently launched an institutional grade bitcoin index fund. The single-asset index fund hopes to capture USD750 million in assets under management during 2020, and aims to surpass USD2 billion in 2021, tapping into what it calls the unmet demand for traditional investment vehicles in Asia’s digital asset space. 

The latest Amun launch of a short or inverse ETP on a digital asset marks a personal achievement for Laurent Kssis, who joined Amun in 2019 as MD Global head of ETP, having spent previous years at XBT Provider from CoinShares. 

“A short ETP is one of the last pieces of the puzzle I have been involved in delivering financial structured products using crypto as underlying, in order to achieve a complete range of products to suit every investor” Kssis says.

His commitment to bringing digital currencies to the masses remains clear. “Bitcoin has turned 10 years old and has still a long way to go but I believe that the protocol behind what bitcoin and blockchain currencies has, will help us to achieve more decentralised peer to peer money and move towards a decentralised finance sector. Anyone with a big bank mainstream will lose out,” he says. And meanwhile he is focusing on retail asset raising for the Amun offering, but also points out that blockchain is a potentially disrupting influence within the financial world. 

“JP Morgan’s core revenues represent 30-40 per cent in transaction fees. If blockchain disrupts this, it will affect their core revenues, Kssis says.

In investment terms, Grayscale’s Sonnenshein says: “It’s a disservice not to consider digital currencies within a portfolio,” Sonnenshein says. “They are here to stay and everyone needs to consider them.” 

However, he warns: “Digital currencies have some attributes that make them uniquely different so investors would need help navigating how to buy, store and safekeep digital currencies.”

Grayscale spent a considerable amount of effort attempting to launch a digital currency ETF back in 2017. 

Their flagship product, the Grayscale Bitcoin Trust (GBTC), was launched in 2013 and is the largest bitcoin vehicle with 1.4 per cent of all outstanding bitcoin.

It was this trust that Grayscale made a filing to the SEC to turn it into a bona fide ETF.

“We made tremendous progress but had to pull out,” Sonnenshein says.

The firm returned to raising assets, letting the market mature and address the many questions raised by the SEC.

GBTC is now an SEC Reporting company – the first digital currency investment vehicle to attain this status. This means GBTC shares are registered with the SEC and is held to the same reporting standards as ETFs. The firm is very clear that this is not an ETF or even an ETF-lite, but it trades liquidly every day and remains the only bitcoin investment vehicle to be publicly traded in the US.

Speaking from InsideETFs, Sonnenshein says: “We have relationships through the ETF community and remind them that while there is not a bitcoin ETF there is a bitcoin investment product structured in a way identical to many investment products that exist today.”

Grayscale offers its main fund which offers exposure to the largest crypto currency funds and also nine single currency products.

“We have solely raised assets from accredited investors, high net worth investors, family offices, hedge funds and larger and more traditional institutions like endowments and pensions,” Sonnenshein says.

“These are investors looking for exposure to the asset class but because of their mandate they don’t have the legal and operational wherewithal to buy and hold digital currencies themselves.”

Asset raising for Grayscale has taken a leap forward over 2019, with more money raised in an aggregate amount over 2019 than the whole period from 2013 to 2018. Some 35 per cent of the firm’s investors have made allocations to more than one product within the Grayscale family, due, Sonnenshein says, to the diversification benefits.

Amun’s original 21Shares suite is composed of 11 trackers – both single as well as crypto basket composite products. The products are fully collateralised, and custodied in institutional segregated accounts with an independent custodian.

Which means that, listed in US dollars throughout, anyone who can gain access to the SIX exchange, can easily buy them, there are also Swiss Franc and Euro options. The currencies covered are Bitcoin; Ethereum; Binance and Tezos.

The firm has also published a survey of cryptocurrencies. An exhaustive review, described as an exhaustive review, which unveils their thesis for two of the biggest phenomena of Q4 2019 — the growth of crypto exchanges, most noticeably Binance, and the maturation of the Proof-of-Stake crypto ecosystem in their theses for Binance Coin (BNB) and Tezos (XTZ).

“The most noticeable lesson from the last quarter of 2019 is that going forward the crypto asset market’s primary price driver will be global macroeconomic events such as changes in China’s economic strategy or geopolitical tensions, rather than microeconomic or industry-specific events” comments Amun’s research lead, Lanre Ige. “This point is important to note for investors over the coming years as it will deeply affect one’s investment strategy for crypto assets.”

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