In this week’s roundup, we also look at the first tokenised fund in Hong Kong SAR, Membrane Labs's new derivatives management platform, and Archax’s capital protect note program.

Roundhill Investments, a US-based thematic-focused exchange-traded fund (ETF) issuer, has revealed its Bitcoin Covered Call Strategy ETF (YBTC), which started trading on the Cboe BZX Exchange on 18 January.

Investors have clamoured for a covered call ETF with exposure to bitcoin and we are proud to be the first to bring such a product to the US market - Dave Mazza, Roundhill Investments

The fund employs a covered call strategy on Bitcoin ETF, aimed to ‘generate monthly income while providing investors with exposure to the price movements of Bitcoin (subject to an upside cap),’ according to the firm's statement.

Roundhill Investments noted that similar to gold, Bitcoin captures investors' attention as an asset that doesn't yield operating profits or cash flows, which puts those income-focused investors in a challenging position.

The largest cryptocurrency by market capitalisation’s historically seen volatility may allow the fund to generate options income from its call-selling strategy. In return, the fund seeks to provide current income to shareholders, according to the firm.

‘Investors have clamoured for a covered call ETF with exposure to bitcoin and we are proud to be the first to bring such a product to the US market,’ Dave Mazza (right), the firm’s chief strategy officer, said.

A covered call strategy involves writing (selling) covered call options in return for the receipt of premiums. The seller of the option gives up the opportunity to benefit from price increases in the underlying instrument above the exercise price of the options but continues to bear the risk of the underlying instrument price declining, the statement added.

Archax debuts capital protect note program

Archax, a UK-regulated cryptocurrency exchange and crypto custody service, has announced the launch of its capital protect note program.

The program seeks to provide a structured approach to digital asset investment, aiming to balance the potential of cryptocurrencies with considerations for capital preservation, the firm said in a statement.

The firm is expanding its product range through its Archax Capital subsidiary to meet the varying needs of crypto investors within a regulated framework.

‘The Capital Protect Notes are designed as an alternative for those interested in the crypto market who are also constrained to focus on regulated instruments,’ Keith O'Callaghan (right), CEO of Archax Capital said. ‘By combining traditional financial principles with the digital asset world, we aim to provide institutional-grade, regulated investment solutions through our comprehensive Archax ecosystem’.

The latest development came after the platform announced plans to launch crypto trading pairs against tokenised money market fund (MMF) instruments last October.

HGI launches first tokenised fund in Hong Kong SAR

Asset manager giant Harvest Global Investments (HGI) has completed its tokenised fund issuance in Hong Kong SAR.

The latest development marked the first fixed-income tokenised fund by a Chinese financial institution in Hong Kong SAR, according to the statement from law firm Linklaters that advised HGI on the transaction.

Meta Lab HK, Harvest Digital Assets-backed fintech startup, supported the fund's tokenisation solution.

This tokenised fund is not a structured product under the Securities and Futures Ordinance, however, since a collective investment scheme has been expressly excluded from the definition of structured product, SRP has learned.

Still, the market interest in tokenised assets has grown over the past year: Last December, SRP reported that HSBC will debut a digital assets custody service in 2024 for institutional clients who invest in tokenised securities.

In June 2023, Bank of China International (BOCI) partnered with UBS on the issuance of CNH200 million (US$28m) fully digital structured notes in Hong Kong SAR, also advised by Linklaters. These digital securities are tokenised on the Ethereum platform.

Membrane Labs introduces new derivatives management platform

Cryptocurrency prime broker Membrane Labs has launched a derivatives management platform, which aims to streamline the process of managing over-the-counter (OTC) derivatives transactions, announced by the broker led by CEO Carson Cook (right).

The new platform, which also facilitates the management of portfolio-level collateral and trade flow settlement, was first used to book a trade between XBTO and Arbelos Markets.

‘The seamless integration of booking, managing collateral with smart contracts, and executing trades, coupled with advanced margin functions, is a smart approach to crypto derivatives trading,’ Joshua Lim, CEO of Arbelos, said in the statement.

Lim added that the platform is a ‘significant step’ to improve operational efficiency and risk management in the digital asset space and enhance trade efficiency.

Valour plans to launch new physical ETP

Valour, the Swiss exchange-traded products (ETPs) issuer owned by crypto firm DeFi Technologies, has announced its plan to launch a physically-backed ETP in collaboration with The Hashgraph Association (THA).

The product, known as the Valour HBAR Staking ETP, is pegged with decentralised distributed ledger Hedera’s HBAR token, according to Valour’s statement.

The move marks the Swiss ETP issuer’s blueprint for expanding physically backed digital asset products and broadening market accessibility for cryptocurrencies to institutional investors on traditional exchanges like XETRA, the statement read.

Last June, the Swiss issuer launched its first physically-backed ETP, the 1Valour Bitcoin Physical Carbon Neutral ETP. This move aimed to align with ESG goals by funding certified carbon removal and offset initiatives in order to neutralise the associated Bitcoin carbon footprint, according to the firm.

Image: SciePro/Adobe Stock.