MV Index Solutions (MVIS), the indexing division of VanEck, has teamed up with ETF issuer ITI Funds to launch the ITI Funds Crypto Index.
The index provides exposure to a diversified portfolio of cryptocurrencies with constituents capped at 15%.
The index aims to provide a diversified approach to investing in the cryptocurrency market.
To be eligible for inclusion, a crypto asset must pass certain structural requirements.
For a coin to be included, there must be an insured cold-storage solution available, they must be traded on the Genesis OTC platform, and be ranked in the top 30 of the MVIS Digital Assets 100 Index.
Additionally, they must not be ‘pegged’ to another currency.
The methodology includes a 15% cap on any constituent to further promote diversification. Reconstitution and rebalancing occur quarterly.
The largest constituents are currently XRP (19.4%), Bitcoin (19.3%), Stellar (16.1%), Litecoin (14.6%), Ethereum (14.3%).
“We are excited to launch this index with ITI Funds,” said Thomas Kettner, Managing Director at MVIS. “Starting with nine digital assets, the index is a dynamic instrument which covers the broader market while at the same time staying within the safest and most recognized names of this new asset class.”
Gleb Yakovlev, CEO of ITI Funds, added, “We aim to launch the first fund structure based on the ITI Funds Crypto Index within the next few weeks. We want to offer an opportunity to invest in a new asset class via a diversified product serviced by well-known fund management professionals and top asset servicing providers.
“In addition to the broad number of components, we also apply a cap to larger coins, which guarantees a wider distribution of weights and helps to avoid a dominance of any single coin.”
Both ITI and MVIS have experience in the ETF space, but it remains to be seen whether a regulator will sign off on a crypto asset ETF. There have been numerous attempts to launch a bitcoin ETF in the US, including from issuers such as ProShares, Direxion and GraniteShares, but all have thus far ended in failure with the SEC citing structural weaknesses and market abuses as reasons for their rejection.
Perhaps the bigger hurdle to launching a crypto ETF right now might not be the regulators, but investors’ appetites. Cyrpto assets have experienced large price declines this year and volatility has shot up. No matter how well diversified a portfolio may be, crypto assets remain hugely speculative.