For the first time, Europeans will have the option to trade in a diversified index fund based on cryptocurrencies.
On June 12, 2017, from Zug, Switzerland, Crypto Fund AG announced it is launching the Cryptocurrency Fund, based on the Cryptocurrency Index, to be registered with FINMA (Swiss Financial Market Supervisory Authority), and will be first investment vehicle of its kind to manifest in the European market.
The Cryptocurrency Index is calculated by an index provider known for investing in virtual currencies with significant market caps, including Ether, bitcoin, Ripple, and other cryptocurrencies. The index's diversification reduces volatility for investors reacting to the surge of emergent currencies in the marketplace, and its growth rate easily outpaces that of traditional equities and securities markets.
Jan Brzezek, CEO of Crypto Fund AG and former president of UBS Asset Management and UBS Group EMEA, spoke of the differences between the new fund and predecessors, which failed to gain approval from regulators:
"We recognized the growing demand of qualified investors for a regulated and transparent gateway to cryptocurrencies and realized that we need a proven and recognized legal framework allowing qualified investors to invest in cryptocurrencies. Unlike the Winkelvoss-ETF, which was rejected by the SEC, we use the regulated and proven Swiss fund structure according to KAG [Swiss Collective Investment Schemes Act], where the asset manager, the fund management company and the custodian bank are legally separate from each other. The Fund will be highly diversified and will not list on an exchange and exclusively target qualified investors.”
In March 2017, the U.S. Securities and Exchange Commission (SEC) rejected an application by the Gemini Exchange founders, Cameron and Tyler Winklevoss, to launch the first ever bitcoin exchange traded fund (ETF). However, since then, the SEC reopened the matter for public commentary and continues to deliberate on the fate of the fund. The SEC is also currently considering a similar application of an Ether-based ETF proposed by EtherIndex Ether Trust.
For this endeavor, Brzezek has teamed up with Dr. Tobias Reichmuth, who acts as chairman of the board for Crypto Fund AG and is the founding investor. In addition, FinTech expert Marc P. Bernegger joins the board, providing his expertise.
Reichmuth expressed that desires to invest in cryptocurrency come from across the board. He said:
"Private and institutional investors alike show a keen interest for cryptocurrencies as a deflationary value storage medium independent of central banks. Access via a regulated vehicle, to execution and safe storage were so far missing. The Cryptocurrency Fund™ will be the first regulated fund globally which provides a safe and easy access to the rapidly growing cryptocurrency world.”
Bernegger noted that it is no coincidence Zug Valley was chosen as a base, citing regulatory clemency and overall regional stability.
"The term ‘Crypto Valley’ has quickly gained acceptance and demonstrates the concentration and growth of Cryptocurrency companies and foundations in the region of Zug and Zurich. It is also important to mention that Switzerland with its good reputation in asset management and stable regulation has already accepted virtual currencies as an asset class. In addition, the Swiss mountains offer safe and tested warehouses for digital assets.”
Crypto Fund AG is advised by the law firm MME Legal, which specializes in blockchain technology and token offerings. The fund is slated to launch in Q4 2017 and an initial dialogue with FINMA has been established.