Just over one-third (36%) of professional investors already have blockchain-inspired assets in their portfolios either through direct investment in cryptocurrencies, stablecoins and security tokens, or via funds, structured products or futures.
Out of the remaining 64% that have not yet invested, 39.29% plan to invest.
The Discovering Institutional Demand for Digital Assets report highlights which coins wealthy investors already own and which ones they plan to buy in the coming months, as well as the most popular regulated funds and structured products that are designed for investors from the traditional finance realm.
The report published by Cointelegraph Consulting and supported by Six Digital Exchange, BlockFi, Bitmain, Blocksize Capital, and Nexo, is based on a poll among 55 portfolio allocators with total assets under management of over €719 billion (US$850 billion), which is almost double the entire market capitalisation of the digital asset market.
The majority of investors with exposure to cryptographic assets was primarily interested in Bitcoin (BTC) and Ethereum (ETH): 88% and 75% of respondents, respectively, exposed to cryptocurrencies have invested in these cryptocurrencies.
However, institutional investors appear to be increasingly interested in security tokens. Out of the investors that plan to invest in the future, security tokens were more popular than Ethereum and other alternative coins.
Some investors hold cryptographic assets for speculation rather than for use as a medium of exchange.
Delivery mechanisms
According to the report, Switzerland has become home to the world’s first actively managed exchange-traded product (ETP) featuring cryptocurrencies as the underlying asset class.
Launched in the summer of 2020, the Bitcoin Capital Active ETP allows retail and institutional investors in Switzerland and, after approval of the prospectus in the EU, across selected EU jurisdictions, to invest in digital assets via a certificate structure. The product is issued by Bitcoin Capital AG and managed by FiCAS AG, a Swiss-based crypto asset manager. Its investment objective is to increase the net asset value of the ETP by trading Bitcoin against carefully selected altcoins from the top 15 coins – the fund was launched with CHF2m on 15 July 2020, and has reached an AuM of CHF3.2m.
The report also mentions 21Shares as one of the pioneers in the Swiss crypto market having launched the first crypto basket ETP on the Swiss stock exchange in 2018. Since then, 21Shares has issued a total of 11 institutional-grade passive investment trackers with the largest single assets (Bitcoin, Ethereum, Ripple, Tezos etc), different index baskets of digital assets, and the world’s first inverse Bitcoin ETP on four different stock exchanges in Switzerland and the EU.
The report also showcases a yield enhancement product issued by SEBA Bank – a dual currency certificate on BTC/USD that sells put options on BTC/USD, and uses inherent Bitcoin volatility to pay out an attractive yield.
Germany is the second most developed market when it comes to investor choice with Börse Stuttgart offering several exchange-traded notes (ETNs) which mimic the price development of Bitcoin and Ethereum, as well as a number of certificates from Bank Vontobel with Bitcoin as an underlying available at Börse Stuttgart and Börse Frankfurt.
According to the report, over 1,000 different certificates are available on the German market that have exposure to digital assets, and contracts for difference trading volume grew from €10 billion a month in August of 2018 to over €15 billion a month by January of 2019.
SRP data
The most recent crypto structure brought to market comes from US firm Invictus Capital which rolled out a new bitcoin structure utilising options and lending strategies to deliver downside protection and yield.
According to SRP data, there are 2,407 live products using five currencies (Bitcoin, Litecoin, Ethereum, Ripple and Bitcoin Cash), as well as 377 products linked to the Bitcoin Group and one to the SEBA Crypto Asset Select Index.
The main providers of cryptocurrency-linked products are Vontobel (2,401) and Leonteq across five markets including Germany/Austria, Switzerland, Denmark and Sweden. The favoured payoff structures to deliver these products are short leverage certificates – (mini futures) (783), long leverage certificates - mini futures (770), and trackers (12).
Leonteq was behind the world’s first reverse convertible on bitcoin listed on Six Swiss Exchange in September 2019.
Click in the link to download the full report.
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