By SIX Exchange, Switzerland’s leading and primary stock exchange could possibly be adding a new cryptocurrency-based exchange-traded product (ETP) which will track the price of XRP, which is currently the third-largest cryptocurrency by market cap.
CEO and co-founder of the Swiss company Amun AG, Hany Rashwan, whose company currently offers several ETPs stated that his firm has received approval from SIX to begin issuing XRP-linked ETPs under the ticker AXRP.
Rashwan added:
“We can comfortably say that we expect to release the world’s first XRP ETP within the next two months.”
In addition to XRP, Rashwan claimed that Amun AG has also acquired clearance to issue ETPs linked to four additional cryptocurrencies which include Bitcoin Cash (BCH), Litecoin (LTC), Stellar (XLM) and EOS.
Even though a fixed launch date is unconfirmed at this stage and will be determined by buyer interest, Rashwan claims that the firm has plans to list all approved ETPs on the SIX Exchange by the end of 2019.
SIX Exchange first listed an ETP which tracks some of the top crypto assets back in November 2018. This product was issued by Amun for both retail and institutional investors under the HODL ticker name which of course is the slang term for holding assets in the crypto community.
Since HODL was listed, the total monthly trading volume for the ETP has surpassed that of XETC which is an ETP that tracks crude oil. XETC was the top traded ETP listed on SIX back in December and January according to data provided by SIX.
Notably, the price per HODL share has dropped from $15 to $13 in light of the recent market decline.
Furthermore, in the past few weeks, Amun also issued ETPs for bitcoin and Ethereum on the SIX Exchange. In addition to this, Rashwan also indicated that to date, most ETP buyers are based in Switzerland with demand from investors abroad who have access to the Swiss market in compliance with their respective nation’s securities laws.
Collateralised ETPs:
Due to the listing rules which are enforced by SIX, since ETPs are passive investment tools which bare no active trading strategies, they are not treated in the same light as collective investment schemes which are of course, at the behest of approval or under supervision by the Federal Financial Market Supervisory Authority (FINMA) Switzerland’s market regulator.
That being said, the structural aspects of crypto-linked ETPs still need to fulfil specific requirements pertaining to investor protection which are based on SIX’s practices for the listing of derivatives.
For example, as explained by Rashwan, every unit of Amun’s crypto ETPs need to be collateralised and backed by an equal amount in crypto assets. Of course, these assets are checked continuously.
He added:
“The collateral also has to be kept at an independent qualified custodian. The calculation of the price is checked multiple times a day by several parties.”
Currently, Amun AG has their collateral stored with Kingdom Trust which is a custodian for traditional and crypto assets and is registered with the Securities Exchange Commission in the States with plans to list additional custodians in various jurisdictions as it rolls out plans to list more crypto ETPs.
Notably, SIX indicated that only the top 15 cryptocurrencies by market cap as listed on CoinMarketCap at the time of application are eligible for trading. Furthermore, the exchange also stipulates that only cryptocurrencies which are “based on open-source software that function according to the principles of blockchain” can be permitted as underlying instruments.
SIX stated:
“Tokens, in the sense of units from a project, which are often issued as part of an initial coin offering, are not permitted as underlying instrument.”
The Future of Tokenised ETPs:
In the foreseeable future, Amun has revealed plans to launch an ERC-standard token which will be administrated by its own platform and will run on the Ethereum blockchain which it will also utilise for the tokenisation of ETPs.
The end goal here is to allow itself as well as third-party investors to tokenise crypto ETPs and traditional ETPs, for example, those that track gold reserves thus enabling these tokens to be traded on security token exchanges.
In addition to this, SIX is also developing its own digital exchange in a bid to utilise distributed ledger technology to increase settlement speeds as well as for the trading of tokenised assets. Recently, SIX selected R3’s Corda Enterprise platform for the development of the infrastructure, with plans to launch the SIX Digital Exchange later this year.
Rashwan added to this stating:
“I don’t think we will have a real licensed and regulated securities token exchange with a professional partner in a reputable country until late this year or early next year – that’s my guess. But when that happens, we will be ready with three to five tokenised ETPs, including our own and others’.”
Another stellar development in the quest for mainstream adoption of crypto assets. Only time will tell if Switzerland’s positive stance towards blockchain and cryptocurrencies will spread to stock exchanges in other nations.
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