Business 6 June 2018

Dan Taylor

OKEx debuts new cryptocurrency index fund

Cryptocurrency trading exchange OKEx has launched its cryptocurrency index fund, becoming the latest major player to launch a fund of this kind.

The fund, known as OK06ETT, made its debut on Tuesday, allowing investors to take exposure to an index based on a basket of major cryptocurrencies. Alongside Bitcoin Cash (BCH) and BTC, the fund also tracks Ether (ETH), EOS, and OKEx’s own utility coin, OKB, which will trade against Tether’s dollar-pegged USDT token.

As an exchange traded fund, investors will be able to buy shares in the fund on exchanges, providing diversified exposure to cryptocurrencies in general, as opposed to investing in any of these currencies specifically.

Investors also have the option to redeem shares in the fund for the underlying asset value less a 0.2% fee, in a move designed to keep the price of the fund’s shares aligned with the value of the fund’s net assets.

OK06ETT is the latest fund of this kind to emerge from a major cryptocurrency exchange, and follows just days after the launch of a similar product, dubbed ‘the world’s first’, by OKEx’s regional rival Huobi.

Retail investors who are qualified to trade on OKEx will be able to invest in the fund, with a minimum commitment from just $100. This is in contrast to similar offerings from the likes of Coinbase and Grayscale Investments, where only accredited investors can buy in, with thresholds of $250,000 and $50,000 respectively.

It is ultimately expected that funds in this structure could be opened as over-the-counter (OTC) products, though this would likely introduce a premium over the net asset value for individual shares. The move can be seen as a step towards maturity for the cryptocurrency space, with products of this kind edging closer to the financial mainstream that investing in cryptocurrencies individually.

With high-growth potential coins like BCH in the mix, and a diversified exposure to the cryptocurrency space more broadly, the products are likely to be attractive to investors interested in the technology and the future direction of the cryptocurrency ecosystem.

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.

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