ETFs are entering the cryptocurrency arena
The age in which cryptocurrencies were set to become a mature and quite simply massive part of the global financial structure are here, is here, and has been for some time.
Despite the now almost dominant nature of cryptocurrency, however, it is not time for the cryptocurrency community to rest on its laurels because the development into other areas of finance – and in particular institutional finance – is now well underway.
Now, cryptocurrency is becoming the focus of the institutional and investment banking world, and it is starting with ETFs.
An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other asset, but which can be purchased or sold on a stock exchange the same as a regular stock, and this is now being concentrated on by some of the world’s largest Tier 1 investment banks which have a core business activity in electronic trading, and it’s Goldman Sachs once again that is going down this route with enthusiasm.
On Monday this week, the asset management division of Goldman Sachs filed an application in the United States with the Securities and Exchange Commission to license and establish a decentralized finance (DeFi) and blockchain-based ETF.
Should this go ahead, it would represent the first step into the cryptocurrency space for Goldman Sachs, which has already demonstrated massive interest in cryptocurrency and has plans to offer futures trading in Ethereum.
This points the metaphorical finger firmly at the reality that there is a definite demand for investment products and managed funds in cryptocurrency assets.
CoinMetro understands this clearly, and is in the process of developing a Multilateral Trading Facility (MTF) which is a type of trading venue operated by an investment firm or a market operator which brings together multiple third-party buying and selling interests in financial instruments.
Given that CoinMetro is fully licensed and regulated as a cryptocurrency exchange, also holds an EMI license, CoinMetro’s plans to develop an MTF within the next twelve months combines these and positions CoinMetro as a challenger bank and a cryptocurrency exchange, all on one platform, which is a very important consideration when looking at how the traditional banks such as Goldman Sachs are now going into managed fund offerings in cryptocurrency.
In the case of Goldman Sachs’ proposed ETF, the idea is that it will invest approximately 80% or more of its assets in securities and stocks which deliver exposure on two themes, those being blockchain technology and DeFi, tracking the Solactive Decentralized Finance and Blockchain index, with the remaining 20% being invested in instruments not included in that index but which are correlated.
Whilst Goldman Sachs’ effort is a milestone in the confidence in cryptocurrency and would be a pioneering ETF, JP Morgan last week added access to cryptocurrency related funds via its wealth management division.
Just recently, BNY Mellon became the first global bank to allow all manner of activity in cryptocurrency, having begun passively advocating the way forward for regulated cryptocurrency exchanges, despite the internal push by one of its currency solutions executives, which made clear a case of the banks beginning to finally realize that they have to join the leaders of the electronic financial services revolution that has matured over the past few years.
The main advantage that CoinMetro will have over these institutional entries into cryptocurrency is that the entire asset base, trading functionality and currency in which the trades are invested in and paid out will be in cryptocurrency with CoinMetro as the exchange for the cryptocurrency transactions, MTF-related investments and payments, as well as a fiat currency on-ramp, meaning that it is a comprehensive challenger bank with absolute decentralized finance comprehensivity and full regulation across all areas of investment classification.
The age of the world’s markets becoming crypto-orientated is here.