Four Swiss banks, Vontobel, Swissquote, and digital banks Sygnum and Seba Bank have joined forces with Swisscom to work on a feasibility study on bankable reference prices in the digital world and jointly launched the Swiss Institutional Digital Asset Reference Rate (Sidar).

Daily fixings for bitcoin and ether were carried out during a two-week test period. The banks acted as data providers and Swisscom as the calculation agent.

‘Popular price and volume data sources are susceptible to manipulation, damaging the image and credibility of the digital asset market as a whole and hindering institutional adoption,’ said Swisscom FinTech’s Aetienne Sardon. ‘As a robust and trustworthy benchmark, Sidar serves as a unique market indicator, reflecting digital asset market interest and activity among regulated participants [and] can be used for creating innovative digital asset linked products, enabling a new wave of financial innovation.’

In contrast to other price sources, Sidar is based exclusively on data from regulated banks and financial institutions. This approach should put regulators at ease as the US Securities and Exchange Commission (SEC), for instance, rejected numerous requests to list and trade bitcoin ETFs because of deficiencies in the reliability of the used reference prices.

Following the completion of the pilot project, Swisscom is now assessing a possible commercial roll-out together with the project partners.

Trailblazers

The four banks involved are pioneers in the crypto structured products market.

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, and has marketed a tracker certificate linked to the Swissquote Multi Crypto Active Index; three tracker certificates on bitcoin (CHF, EUR, USD); a tracker certificate linked to the Swissquote Bitcoin Active Index as well as tracker certificates on ethereum, litecoin, bitcoin cash and ripple. 

Seba Bank launched the first dual currency certificate on BTC/USD that sells put options on BTC/USD in 2020.

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.

Vontobel launched in February two new delta one certificates tracking the performance of Bitcoin as demand from investors seeking to participate in the cryptocurrency rally continues. The new certificates which are subject to a management fee of 3.75% pa replace the bank’s bitcoin tracker certificates which were terminated as the product offering was ‘no longer economically viable’.

The launch coincided with Marex’s second crypto note - an autocallable linked to ethereum targeted at professional investors which followed the first ever autocallable notes linked to Bitcoin with downside protection launched by the non-bank issuer in January.

Team behind US$1bn bitcoin ETP deploys Litecoin play

Specialist provider of innovative, digital asset-backed securities ETC Group will list the LTCetc – ETC Group Physical Litecoin ETC on Deutsche Börse’s Xetra platform on Wednesday 14 April.

The exchange traded cryptocurrency is structured as an asset-backed debt security issued in Germany, and is marketed and distributed by HANetf. The product which will track the price of Litecoin is the first linked to this cryptocurrency to be listed on Xetra and will be central counterparty cleared.

The launch follows ETC Group’s first product - BTCetc Bitcoin Exchange Traded Crypto launched on XETRA last June, which has seen its assets under management grow to over US$1 billion in just seven months, and the  ETC Group Physical Ethereum ETC  which tracks the price of ether and was the first ethereum ETP to be listed on the Deutsche Börse.

BTCE had a turnover of 925million EUR on Xetra in February with a market share of 79.4% of the ETN segment of Xetra and was the most traded ETP across the whole of Xetra. The third crypto ETC from ETP Group adds to. ZETH traded over $1million in its first week of launch and had spreads of just 23 basis points. The new ELTC has a management fee of two percent.

‘Litecoin has grown by 342% in the past 12 months and is the nineth largest cryptocurrency by market capitalisation at US$14.6 billion with growing interest from institutional and retail investors,’ said Bradley Duke, CEO of ETC Group. ‘It’s often talked about as the silver to Bitcoin’s gold.’

Six adds digital asset bank as new ETP issuer

Seba Bank has joined Six Swiss Exchange as the third ETP issuer on the exchange with four ETPs providing exposure to cryptocurrency underlyings.

Seba Bank was one of the first financial institutions with a focus on digital assets and crypto currencies to receive a Swiss banking and securities dealer licence in 2019 - the bank offers investments, safekeeping and trading in digital and traditional assets as well as borrow against these assets and issue tokens within an integrated, end-to-end banking platform.

‘With the new products from SEBA, investors have the comprehensive range of 79 crypto products to choose from,’ said Christian Reuss, head Six Swiss Exchange, markets, Six.

The Swiss Stock Exchange is the world’s leading marketplace for regulated products with cryptocurrency underlyings with CHF2.42 billion (US$2.62 billion) trading turnover and 71’426 trades year to date.

In the sixth year after the admission of crypto products to trading at SIX, seven ETP and structured products issuers offer products on eight different crypto currencies. Seba Bank listed a bitcoin as well as an ethereum and a crypto basket ETP, taking to 51 the number of ETPs available on the Swiss Stock Exchange.

Crypto ETP volumes fall despite bitcoin’s rally

Bitcoin once again set a new all-time high of US$61,749 in March. Despite this, institutional weekly flows have slowed down, and average product volumes decreased by 17.6% to $772mn. Aggregate AUM has increased 8.76% to US$58.7bn, according to a report from Cryptocompare.

Institutional flows slowed while total AUM increased to US$58.7 billion. Average weekly asset inflows across all major product providers decreased by 70.5% since February to US$149.6m.

According to the report, the total AUM across all product types increased by 8.76% to US$58.7 billion (as of 22 March).

Grayscale’s Bitcoin Trust product (GBTC) dominates the AUM with US$37.4bn (up 6.8%) with ETC Group’s BTCE taking the largest AUM across all ETNs and ETFs at US$1.27bn (up 25.72% since late February).

In addition, aggregate daily product volumes across all product types have decreased by an average of 17.6% in March 2021 compared to February 2021.

Across ETNs/ETFs, ETC Group’s BTCE traded the highest daily volume in March at US$43.8mn (down 21.0%) followed by Purpose’s recent Bitcoin ETF (BTCC) at US$12mn (down 71.8%) and VanEck’s VBTC product at US$5.23mn (down 25.7%).

New ethereum ETN launched on Deutsche Börse

MV Index Solutions in partnership with CryptoCompare have licensed the MVIS CryptoCompare Ethereum VWAP Close Index (ticker: MVETHV) to VanEck for the use as underlying for their second cryptocurrency exchange-traded product.

The MVIS CryptoCompare Ethereum VWAP Close Index is an index designed to measure the performance of a digital assets portfolio which invests in ethereum, with a closing value based on an hourly VWAP price. The rules-based index covers the broadest aggregate pricing for indices calculated by CryptoCompare and was designed to be an hourly price for ethereum in USD across major exchanges.

MV Index Solutions and CryptoCompare partnered in March to launch of the MVIS CryptoCompare Ethereum Benchmark Rate (ticker: EBR), an index designed to offer an hourly price for ethereum in USD.

The index aggregates transaction prices on the top five exchanges, selected via the CryptoCompare Exchange Benchmark, and disseminates hourly. The index is based on an average of quantity-weighted median prices. 

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