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The main stock exchange in Switzerland has given the green light to the first exchange product traded in the world by tracking multiple cryptocurrencies, just as the price of bitcoin, the most popular digital currency, has fallen to its lowest level for over a year.
The Amun Crypto ETP, which will start trading next week on the Zurich Stock Exchange, is designed to track an index based on the movements of five major cryptocurrencies.
Just under half of ETP's assets will be invested in bitcoin and the remainder divided between XRP (25.4%), ethereum (16.7%), bitcoin cash (5.2%) and litecoin (3%) . The ETP will have an annual management fee of 2.5%.
Hany Rashwan, co-founder and CEO of Amun, a London-based financial technology firm, said that the ETP cryptocurrency was built to meet the same stringent standards required by traditional exchange-traded products widely used by investors.
"Amun's EUN will offer institutional investors limited to investing only in securities or will not want to establish custody for the exposure of digital assets to cryptocurrencies, it will also provide access to retail investors who currently do not have access to trade crypts due to local regulatory impediments, "said Rashwan.
Two rival suppliers, CoinShares and Greyscale, already offer investment vehicles in digital currency, but they are different legal structures and linked to single currencies.
Jane Street and Flow Traders, two specialist market makers, provided seeding for Amun's EUN and agreed to act as authorized participants.
ETP will operate under the ticker Hodl, a nod to a favorite exhortation adopted by cryptocurrency investors – "resist for dear life" – in response to the wild volatility that has swept the market.
The value of the bitcoin rose up to $ 20,000 last year and has now fallen to less than $ 5,550.
Benoît Cœuré, one of the main central bankers of the eurozone, last week called bitcoin "the evil progeny of the financial crisis".
Mark Carney, governor of the Bank of England, said in March that cryptocurrencies were "inherently risky" compared to traditional financial assets and called for stricter regulation. Critics have argued that cryptocurrencies have been exploited by criminals for money laundering, terrorist financing, drug trafficking and tax evasion.
US regulators have rejected multiple applications for the launch of funds traded in cryptocurrency due to concerns that such vehicles could expose investors to "fraudulent and manipulative deeds and practices".
The IMF suggested last week that central banks should consider issuing digital money as a way to reduce the costs to society associated with the use of cash.
Christine Lagarde, head of the International Monetary Fund, said that digital currencies supported by governments could help people and businesses in remote and marginalized regions.
"We know that banks are not exactly running to serve poor, rural people, there may be a role for the state to provide money for the digital economy," Lagarde said.
Nouriel Roubini, the economist known as Dr Doom, said that a digital money system supported by central banks would hammer "the last nail in the coffin" of existing cryptocurrencies.
"It would be safer, cheaper, scalable, secure, anonymous, efficient, innovative, financially stable than any cryptocurrency ever" tweeted Mr Roubini.
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