Some potentially bullish news for the cryptocurrency industry has just surfaced, with Swiss regulatory authorities approving an application to facilitate crypto-based exchanged traded products (ETPs). The application, which was issued to Switzerland’s primary stock exchange in Zurich, SIX Swiss Exchange, will allow investors to speculate on a group of cryptocurrencies in a basket-like format.

For those unaware, an ETP is a financial derivative that includes products such as an Exchange Traded Fund (ETF).  In a nutshell, they act as a fully regulated financial security that allows investors to speculate on the underlying of an asset, or group of assets, without needing to actually hold the asset in question. Outside of the crypto space, ETPs and ETFs can be bought, sold and traded on practically any asset classes, such as Gold, stocks, currencies, oil, wheat, indices and more.

Switzerland Cryptocurrency

In the case of the aforementioned SIX Swiss Exchange application, the ETP will concern a basket of five cryptocurrencies. This includes Bitcoin, Ripple, Ethereum, Litecoin and Bitcoin Cash. As a result, investors will be able to invest in blockchain assets from a wider perspective, rather than limiting themselves to just one cryptocurrency, such as Bitcoin.

Such a derivative product is also highly beneficial to investors as it can often provide an avenue to mitigate risk. For example, if a particular cryptocurrency loses value, but the wider markets make gains, then it is hoped the underlying risks are reduced.

Will the ETP Approval Lead to a New injection of Institutional capital?

Much like ETPs in the real-world financial markets, the SIX Swiss Exchange ETP will be primarily reserved for large institutions and accredited investors. Regarding the latter, the U.S. class an accredited investor as somebody that has a net wealth surplus of $1 million, or earns a salary of $200,000 or more, for a period of at least two years. As a result, this particular financial product is potentially not suited for the more casual trader.

Interestingly, the Swiss ETP has been handed the ticker symbol “HODL”, which is a term widely used by crypto enthusiasts as a play on the word “HOLD”, referencing the act of refraining from panic selling when a particular coin turns bearish. As the HODL index will operate in a fully stringent and transparent marketplace, investors will be afforded a range of regulatory safeguards, as would be expected in the real-world markets.

This includes institutional-grade custodianship, a crucial factor for those investing significant amounts of capital. This acts as a guarantee to those parting with their funds, meaning that the underlying blockchain assets they are backing are free from the threats of malpractice, insofar that should the platform experience a hack, investors are covered in the form of insurance.

The Swiss ETP is Great, but the U.S. Based Bitcoin ETF will be the Golden |icket

Ultimately, some within the cryptocurrency community believe that the SIX Swiss Exchange ETP could potentially work in favor of the much anticipated Bitcoin ETF application in the U.S. The application, originally submitted by the Chicago Board Options Exchange (CBOE) in mid-2018, is still being reviewed by the Securities and Exchange Commission (SEC). Although all other Bitcoin ETFs have thus far been rejected by the SEC, many believe that the CBOE-backed proposal has a reasonably good chance of success.

Bitcoin ETF

Read: What is a Bitcoin ETF?

The main reason for this is that in December 2017, the CBOE were granted a license to operate the world’s first Bitcoin futures market. If the application is accepted, with a decision expected to be made in early 2019, then it is hoped that the blockchain industry will receive a much needed injection of capital at an institutional level.

Kane Pepi

Posted by Kane Pepi

Based on the Blockchain-Isle of Malta, Kane holds a Bachelor’s Degree in Accounting and Finance, a Master’s Degree in Financial Investigation and he is currently engaged in a Doctorate – researching financial crime in the virtual economy. With a keen passion for research, he currently writes for a variety of publications within the Financial and Cryptocurrency industries.


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