Top 15 Crypto Certificate
Originally expected as early as August 2018, the BlockState CTF15 Crypto-Strategy certificate has finally been launched at the end of the year. It is listed under ISIN CH0421235752 on the Vienna Stock Exchange, where the first day of trading has been noted as December 21, 2018.
This product gives Europe a clear leg up in the race to provide financial instruments accessible to traditional investors, while in the US, attempts to win approval for cryptocurrency ETFs continue, as just reported by Modern Consensus. With the first — relatively complex — product launched, and the required support infrastructure established, it is easy to see Blockstate diversifying their offering with single-currency products, for example a “CFT Bitcoin” certificate.
The CFT15 certificate offers the top 15 cryptocurrencies, weighted by market cap with a 30% limit, and monthly rebalancing. The current composition is as follows: BTC 30%, XRP 22.3%, ETH 19.5%, EOS 3.7%, USDT 3.6%, BCH 3.5%, LTC 3.3%, TRX 2.9%, XLM 2.7%, ADA 2.1%, BNB 2.1%, XMR 1.3%, MIOTA 1.2%, DASH 1.0%, NEO 0.9%. As is evident from this list, stablecoins are not excluded by the methodology, which would be desirable — why pay a 1.5% management fee for holding a cash-equivalent position?
Blockstate presents the following benefits of the CTF15 certificate:
- The above-mentioned 1.5% management fee is the only expense, there are no performance, redemption, or subscription fees
- The certificate is 100% asset backed — investor assets are ring-fenced and segregated in an SPV and are not exposed to BlockState credit risk (which is what one typically associates with an ETF, but not necessarily with a certificate)
- Subscriptions and redemptions can be arranged through customers’ bank or broker, making the product accessible for traditional investors; the issue price per certificate was EUR 1,000, and there is a minimum investment quantity of 10 certificates
- Blockstate states that all crypto assets are stored via a multi-level cold and hot wallet storage system with rigid business continuity planning for IT- and non-IT related failure as well as insider threats
- CFT15 offers full transparency of the assets held in the strategy
- The ISIN provides easy product access and pricing through the daily auction on the Vienna Stock Exchange (where there has been no volume so far)
According to the methodology document, live and historical pricing will be calculated and published at https://blockstate.com/decentral-calculation-agent/, which does not seem to be available yet.
Viewed from the perspective of a BTC benchmark, as presented on the company’s website, the CFT15 is a bet on the outperformance of alt coins. Hence it is natural that the peak outperformance of the CFT15 vs BTC (based on the backtesting that the company has performed) occurred at the time of the trough in BTC market share of total cryptocurrency market capitalization, which hit an all-time low of 32.45 percent on January 13, 2018.
The CFT15 is a great first product that opens the door for other financial instruments to make the cryptocurrency market accessible for traditional investors. We are looking forward to learn about additional offerings, from Blockstate and their competition.
Disclaimer: This article is for information purposes only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity or for the services of Blockstate.
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