MV Index Solutions (MVIS), the indexing division of ETF provider VanEck, has unveiled a series of indices designed to track the performance of the fragmented global cryptocurrency markets. With VanEck having already filed regulatory papers to bring products holding Bitcoin instruments to market, the indices shine a light on the potential strategies which may underpin a future VanEck-branded ETF.
The MVIS CryptoCompare Indices include twelve single cryptocurrency indices as well as four multiple digital asset indices.
Gabor Gurbacs, director of digital asset strategy at VanEck, said: “VanEck is committed to supporting long-term, structural innovation in the asset management industry. High quality digital asset indices are among the first building blocks in a series of market structure oriented digital asset initiatives.”
“Digital assets are a dynamic area that merits attention, especially by professional investors,” added Thomas Kettner, managing director at MVIS. ”Although not without risks, digital assets have the potential to integrate into the broad economy and become an investable asset class in their own right. MVIS is at the forefront of these market developments.”
Launched in partnership with CryptoCompare, a London-based digital asset data provider, the MVIS CryptoCompare Indices utilise a digital asset pricing methodology incorporating pricing and trade data from 50+ major digital asset exchanges around the world. Prices are weighted by volume on a continual basis in order to facilitate global price discovery.
Charles Hayter, CEO and co-founder at CryptoCompare, said: “We are excited to partner with MVIS in offering next-generation index strategies. This alliance allows us to bring digital market innovation and expertise to the asset management industry.”
The series includes twelve single digital asset indices, tracking the performance of Bitcoin, Ether, and Ripple, among others, and the following four multiple digital asset indices: MVIS CryptoCompare Digital Assets 5 Index, MVIS CryptoCompare Digital Assets 10 Index, MVIS CryptoCompare Digital Assets 25 Index, and the MVIS CryptoCompare Digital Assets 100 Index. The multiple digital asset indices provide exposure to the five, ten, 25, and 100 largest and most liquid cryptocurrencies exchanged globally. An index capping methodology for multi-component indices promotes diversification and increases exposure to emerging digital assets.
MVIS notes the indices are the first to meet investment industry benchmarking standards by providing a public rulebook for fork treatments and other events, industry-wide data distribution, proper identifiers and further standard index governance requirements that are expected from a regulated, unaffiliated, major benchmark provider.
According to MVIS, the indices are robust and transparent benchmarks that may be used for active and passive portfolio strategies. Several propositions have been put forward for a cryptocurrency-linked ETF. Other than VanEck, those seeking to launch their own digital asset ETFs include the Winkelvoss twins, Evolve Funds, and ProShares – which has also filed for a short (or inverse) Bitcoin ETF. However, regulators have been reluctant to grant approval, citing the risk of fraudulent activities due to the lack of regulation in major digital asset markets.