In an industry first, institutional digital asset players use a derivative product to directly hedge the volatility of bitcoin; new crypto ETFs and ETNs provider enters the market; first bitcoin-denominated bond launched.
GSR has completed the first ever cryptocurrency variance swap transaction with crypto asset investment firm BlockTower Capital, one of a number of sophisticated counterparties that the digital asset trading firm is working with, alongside mining pools, lenders and exchanges.
‘As the market evolves, more players have been wanting customizable protection against unwanted market swings,’ said Rich Rosenblum (pictured), cofounder of GSR. “It is natural for prudent CFOs to seek ways to isolate and mitigate unwanted risks on their balance sheets. Structured products have emerged as a direct result of extreme uncertainty in this rapidly growing space."
The variance swap which was first released in April is aimed at institutional investors and professional traders to directly hedge against the volatility of bitcoin.
GSR believes structured products and derivatives are an ‘appropriate risk management tool’ to mitigate against extremes in risk and return of some asset classes such as foreign exchange markets which have a tendency towards low volatility, and structured products are often developed to increase the volatility of returns; and commodities and now cryptocurrency markets which experience high volatility, and structured products can be used a risk management solutions.
The introduction of structured products to crypto aims to reduce undesirable risk, as is generally in the interest of institutional players or corporate entities. The GSR suite of structured products has been ‘engineered to reduce volatility and benefit the portfolio and business models of sophisticated counterparties in the cryptocurrency space by better defining and constraining their risk parameters’.
GSR’s Variance Swap allows institutions, like BlockTower, a direct means to hedge volatility, effectively introducing more options for stabilizing returns of the end investor.
Crypto ETFs and ETNs in focus as new provider enters market
Iconic Holding, a portfolio company of both FinLab and High-Tech Gründerfonds (HTGF), is set to launch its crypto asset management as a service (AMaaS) platform for external crypto asset managers in Q3, as well as further scale its crypto asset index fund issuer, Iconic Funds, under the new joint venture structure.
In particular, Iconic Funds aims to expand its crypto asset index fund offerings to institutional and accredited investors, as well as explore crypto asset exchange traded products (ETPs) such as ETNs and ETFs in Europe for a planned Q4, 2019 launch.
In addition to serving his role as CEO and managing partner of Iconic Holding and its underlying brands, Patrick Lowry (above) will also assume the position of head of asset management for Cryptology to streamline the joint venture. In this role, Lowry will focus on new crypto investment vehicle product development and issuance for the Iconic Funds joint venture.
Iconic Holding is a global crypto asset management firm and fintech company builder headquartered in Frankfurt, Germany with offices in London and New York. Cryptology is a Malta-based investment company investing in crypto assets and crypto companies, founded by Christian Angermayer’s family office, Apeiron Investment Group.
Investment banks ‘drop the ball’ as first bitcoin-denominated bond is launched
Luxembourg-based Argento, a securitisation firm, has joined forces with London Block Exchange (LBX) to issue the bitcoin-denominated bond, which is regulated under the UK Financial Conduct Authority (FCA).
The Argento-LBX bond represents a first in regulated cryptocurrency products, in that it contains no fiat exposure for investors. It is available via Bloomberg Terminal, and is the first crypto product to have its own ISIN code.
The notes are exclusively traded via LBX and are custodied by an FCA regulated custodian in London. The register of noteholders is maintained on the blockchain. Capacity for each series is strictly limited to 10,000 bitcoins.
‘We are thrilled to have structured and produced the world’s first institutional grade bitcoin denominated financial product,’ said Phil Millo (right), Argento’s manager. ‘The large investment banks really dropped the ball on this one.’