In this week’s roundup, we also look at the launch of the tokenised investment fund by UBS Asset Management and SBI Digital Markets’ plan on the structured note.

Hong Kong’s broker Victory Securities has secured the requisite regulatory consent from the Securities and Futures Commission (SFC) to market and distribute cash-settled virtual asset structured products to qualified professional investors, the first licensed broker getting such approval.

At present, there is lack of options for strategic investment product in the regulated virtual asset investment market - Kennix Chan, Victory Securities

According to the firm’s announcement on Monday, it plans to begin marketing virtual asset structure products to qualified professional investors by the end of the year following its license approval. Victory Securities said it also intends to offer relevant products and services to clients who hold stablecoins through the broker's omnibus account to earn extra yield.

‘At present, there is lack of options for strategic investment product in the regulated virtual asset investment market,’ Kennix Chan (pictured), executive director at Victory Securities, said in the statement.

‘The regulatory green light for Victory Securities to market virtual asset structured products signifies an important step forward for Hong Kong to build a comprehensive virtual asset ecosystem,’ he said.

SBI builds cross-border distribution framework for tokenised securities

SBI Digital Markets renewed its participation in the MAS' Project Guardian pilots by taking part in the fixed income and asset and wealth management pilots with a focus on driving commercial adoption.

As part of the fixed income pilot, SBI Digital Markets set out to expand the distribution network of tokenised securities and create global secondary market liquidity for investors.

The Singapore-based firm said it is planning to launch the industry’s first regulated framework with the global secondary market in the next two months, with the first product being a structured note backed by luxury wines followed by intellectual property and commodities.

Earlier this year, the Singapore-based digital asset arm of Japanese conglomerate SBI Group partnered with Zurich-based CAT Financial Products to establish a manufacturing and distribution channel of structured products between Asia and Europe.

‘From origination, tokenisation, distribution, digital custody, listing on digital asset exchanges and building secondary trading – we have put in place workflows for efficient cross-border distribution networks whilst allowing for dual issuances in traditional and tokenised formats,’ Winston Quek (right), CEO of SBI Digital Markets, said in the statement.

Meanwhile, under the asset and wealth management pilot, SBI Digital Markets looks to see the potential commercial application of a UBS tokenised fund with a Variable Capital Company (VCC) structure that it collaborated with the Swiss bank in October 2023, including bringing operational efficiencies with smart contract-based automation of fund subscription and redemption workflows.

To facilitate cross-chain communication with the tokenised fund contract, SBI Digital Markets created a digital transfer agent smart contract, leveraging Chainlink’s industry-standard Cross-Chain Interoperability Protocol. The firm said the pilot demonstrated the feasibility of using smart contracts and the Chainlink Platform to streamline fund operations across different blockchain networks and financial systems.

UBS AM launches tokenised investment fund

UBS Asset Management has launched its first tokenised investment fund, built on Ethereum distributed ledger technology.

‘We have seen growing investor appetite for tokenised financial assets across asset classes,’ Thomas Kaegi (right), co-head of UBS Asset Management APAC, said in the statement.

The latest tokenisation development came after it launched a live pilot of a tokenised variable capital company fund in October 2023 as a part of the Monetary Authority of Singapore’s Project Guardian initiative. Last year, the Swiss bank also originated CNH200m of digital structured notes for Bank of China International.

Valour introduces physical yield bearing bitcoin ETP

Digital assets ETP issuer Valour Digital Securities has launched the first-ever physical yield-bearing bitcoin exchange-traded product (ETP) in collaboration with Core Foundation on Frankfurt Börse Xetra to attract German investors.

The Bitcoin exposure-linked product, 1VBS, provides investors with an initial fixed yield of 1.40% and generates pass income through the staking mechanism, said Elaine Buehler, head of product at Valour.

'This dual benefit enhances an investor's investment strategy while simplifying the process, allowing the earning of rewards without the technical complexities of managing underlying assets and staking process,' Buehler said.

The 1VBS ETP generates yield by delegating Bitcoins to a validator of Core Chain developed by the Core Foundation through non-custodial, native Bitcoin staking. Staking rewards, received as CORE tokens in a separate wallet, are converted to Bitcoins and added to the ETP's NAV and own wallet daily. The underlying assets of the ETP remain in Bitcoins at all times, the firm stated.

The product started trading on Xetra on 1 November with a 0.9% management fee.

The latest product activity followed the firm licensing the STOXX Digital Asset Blue Chip X index as an underlying for an exchange-traded product (ETP) listed on the Frankfurt Stock Exchange. The index marks STOXX’s entry into the digital assets space after it went live on 6 December 2023 in partnership with crypto-financial services provider Bitcoin Suisse.

DWS Xtrackers becomes new crypto ETP issuer at SIX Swiss Exchange

DWS Xtrackers has joined the SIX Swiss Exchange as the 17th cryptocurrency ETP issuer by listing two new products.

Xtrackers Galaxy Physical Bitcoin ETC Securities tracks the MSCI Bitcoin Reference CMBR USD Index, while Xtrackers Galaxy Physical Ethereum ETC Securities track the MSCI Ethereum Reference CMBR USD Index. Both products started trading on 29 October. Flow Traders are the market marketers for these two products.

SIX Swiss Exchange said that since the beginning of the year, there have been 170 ETPs on cryptocurrencies listed on the exchange, with a trading turnover of CHF1.8 billion and close to 145,000 trades.

Among the total 376 ETPs and derivatives with cryptocurrency underlying. In terms of trading volume share, Bitcoin dominated demand with 45.2%, followed by Ethereum with 15.0%, and Solana with 11.5%.

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