Zurich-based index provider Limeyard has partnered with Decentriq, a fintech firm enabling financial institutions to access distributed ledger technology, to launch of the Limeyard Crypto Asset Index.

The Limeyard Crypto Asset Index (LYCAI) has been designed to represent the cryptocurrency market while addressing regulatory and compliance related concerns. The index has been licensed to be used as benchmark for the Blockchain Technologies Note (DE000A19VT92), listed on the Frankfurt Stock Exchange, and it is available for licensing by other financial products, according to Patrick Valovic (pictured), founder and managing partner of Limeyard.

The idea behind this index is to provide the right criteria to make it a straight forward for investors as possible, according to Valovic. "We have seen a number of ETF providers using crypto-currency indices that have been turned down by regulators for a number of reasons," said Valovic. "We wanted to provide a solution with a strong concept and methodology to meet the requirements of the regulators but also make it an appealing index to invest in via ETFs or structured certificates."

The rules-based methodology establishes that the index universe is comprised of crypto assets (coins or token) traded on at least two out of 13 eligible exchanges. Crypto assets enabling anonymity are precluded, as well as those pegged to fiat currencies. To be included in the index, components are screened to ensure their investability (daily trading volume) and reduce their volatility (exponential moving average of the daily market capitalization). The index which is calculated both in USD and in BTC is comprised of the top 20 components passing these screenings.

"We wanted to exclude any currencies that are granting anonymity or can be used in black-market activities and instead of a cap we have deployed the Sigmoid curve as a smoothing market capitalisation approach in the selection process," said Valovic. "The diversity within the index, the criteria and methodology make this index a very robust investment proposition."

Decentriq, a provider of tailored brokerage, asset management and blockchain benchmarks, which has issued a note linked to the Limeyard Crypto Asset Index (LYCAI) with Median Trust as the issuer for legal reasons, is seeking to bridge traditional finance and blockchain technology and believes that structured products and ETFs provide an efficient way to deliver these strategies, Maximilian Groth (right), co-founder and managing director, at Decentriq.

"Over the last year, we identified the need for a robust index and we found in Limeyard the right partner to develop and asset that could be used by investors to get exposure to this area," Groth said. "Our partnership with Limeyard is aimed at furthering our goal of providing access to blockchain investment solutions to traditional and modern investors."

The note uses a dynamic, risk-adjusted and technology focused investment approach to provide qualified investors exposure to blockchain assets while staying with their compliant banking partner, according to Groth. "We believe structured products and ETPs in general provide an efficient way to deliver these strategies," he said. "The ground work has been done and we have developed the right infrastructure with the right partnership. It's only a matter of time before we see new products. We think this kind of benchmark will help to respond to increasing demand for blockchain investments because there is no comparable index out there that addresses the legal uncertainty we have seen with other benchmarks."

The new Limeyard crypto-indices were listed on the Vienna Stock Exchange (VSE) today and will be disseminated to 250 of exchange's data vending customers in 68 countries worldwide.

The launch comes on the back of recent developments showing capital from institutional investors being invested in crypto-currency activities including Goldman Sachs' move to launch a cryptocurrency trading desk, and the announcement from Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange (NYSE), earlier in the year, that it would provide a cryptocurrency data feed in a partnership with Blockstream.

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