9 min readWhat is the CoinShares Finanzen.net Top 10 Crypto ETP?
The CoinShares Finanzen.net Top 10 Crypto ETP is an investment product designed to provide broad exposure to the top 10 digital assets by market capitalisation. This product is the result of a strategic partnership between CoinShares, Europe’s leading digital asset investment firm, and finanzen.net, Germany’s largest financial news portal. The ETP offers a seamless and efficient way for investors to gain diversified exposure to the cryptocurrency market and is listed on Xetra, Germany’s main market.
Who is the CoinShares Finanzen.net Top 10 Crypto ETP designed for?
The CoinShares Finanzen.net Top 10 Crypto ETP was built for investors seeking exposure to the crypto market in a single, efficient trade.
Similar to how popular equity indices like the S&P 500 or the DAX provide a snapshot of the stock market's performance, this ETP offers a comprehensive representation of the leading digital assets by market capitalisation. It is ideal for those who want to diversify their investment portfolio with crypto assets without the complexity of managing individual tokens.
Whether you are an experienced crypto investor looking for a diversified product or a traditional investor exploring the digital asset space, this ETP simplifies the investment process and provides a regulated, transparent, and secure way to participate in the growth of digital assets.
Key features of the ETP
Diversified exposure
The CoinShares Finanzen.net Top 10 Crypto ETP includes the top 10 cryptocurrencies by market capitalisation, offering a comprehensive snapshot of the leading digital assets in the market.
Limit concentration risk: This diversified approach helps mitigate the risks associated with investing in a single cryptocurrency.
Physically backed
The ETP is 100% physically backed by the underlying cryptocurrencies, ensuring that each unit of the ETP is fully collateralized by an equivalent amount of digital assets. Assets are held with an institutional-grade, regulated custodian specialising in digital assets.
Transparent structure: Full physical backing means no credit risk, and ensures investors have total transparency when analysing their investment.
Staking rewards
Investors in the CoinShares Finanzen.net Top 10 Crypto ETP can benefit from staking rewards, which are variable and announced quarterly.
Built-in rewards: Staking rewards offer an additional yield on the investment that is built into the overall return profile of the ETP, similar to accumulating dividends in an equity fund.
Key structural information
Custody
The digital assets within the ETP are held with an institution-grade regulated custodian, ensuring the highest standards of security and compliance.
Bankruptcy-remote structure
The ETP employs a bankruptcy remote structure, which means that the assets are segregated and protected from the general creditors of the issuer, adding an extra layer of security for investors.
Management fees
The CoinShares Finanzen.net Top 10 Crypto ETP charges a competitive management fee of 1.5% per annum, covering the costs associated with managing and maintaining the ETP.
Rebalancing
The ETP is rebalanced quarterly by CoinShares to align with its underlying index, the finanzen.net Top 10 Crypto Index (FCI).
About the underlying index
The CoinShares Finanzen.net Top 10 Crypto ETP tracks the finanzen.net Top 10 Crypto Index (FCI), which is designed to represent the performance of the largest digital assets by market capitalisation. The index is constructed through a collaborative effort between finanzen.net, CoinShares, and Compass Financial Technologies, leveraging their combined expertise in financial markets and digital assets.
Index composition
The FCI index includes the 10 largest cryptocurrencies by market capitalisation, calculated based on a 3-month rolling average. This method ensures that the index accurately reflects the leading assets in the market over time, smoothing out short-term volatility and providing a more stable representation of the crypto market's top-tier assets.
Exclusion criteria
To ensure compliance with regulatory standards and market integrity, certain types of cryptocurrencies are excluded from the index. These exclusions include:
Stablecoins: Excluded due to their pegged nature, which does not reflect typical market dynamics.
Privacy & meme coins: Excluded due to regulatory concerns and potential compliance issues.
Centralised coins: Coins that are deemed too centralised and therefore exposed to market manipulation, such as some exchange-specific tokens, can be excluded from the eligible universe.
Rules of the Index
The FCI index operates under a set of systematic and transparent rules designed to maintain consistency, reliability, and regulatory compliance. These rules are publicly available and ensure that the index remains a credible benchmark for the top cryptocurrencies.
Quarterly rebalancing
The index is rebalanced quarterly to reflect changes in the market capitalisation of the included cryptocurrencies. This rebalancing is independently determined by Compass Financial Technologies, a regulated benchmark administrator, ensuring an objective and unbiased approach. The rebalancing process includes:
Updating weights: Adjusting the weights of the individual cryptocurrencies based on their 3-month rolling average market capitalisation.
Reviewing constituents: Evaluating the top 10 cryptocurrencies to ensure they continue to meet the inclusion criteria.
Compliance with EU Benchmark Regulation (BMR)
The FCI index is fully compliant with the BMR, which governs the creation and administration of benchmarks used in financial markets within the European Union.
Coin selection criteria
The selection of coins for the FCI index is driven by a clear and robust methodology designed to capture the leading assets in the cryptocurrency market. The selection criteria include:
Market capitalisation
The primary criterion for inclusion in the FCI index is market capitalisation, specifically the 3-month rolling average market capitalisation. This approach mitigates the impact of short-term fluctuations and provides a more accurate representation of a coin's market position over time.
Listability on Xetra
To be eligible for inclusion, cryptocurrencies must meet the listability criteria of Xetra, one of the leading exchanges in Europe. This criteria ensures that the selected coins are accessible, liquid, and compliant with regulatory standards, making them suitable for inclusion in a widely traded ETP.
Exclusions for regulatory compliance
Stablecoins, privacy coins and meme coins are excluded to maintain regulatory compliance and market integrity. In addition, Compass Financial Technologies can exclude some other coins which are deemed not to adhere to the highest standards of accuracy, reliability, and transparency dictated by BMR. This exclusion criterion helps to focus the index on cryptocurrencies that offer genuine market exposure and investment potential.
How much of the market will I get exposure to via the ETP?
The CoinShares Finanzen.net Top 10 Crypto ETP aims to provide a broad exposure to the crypto market. Currently, the underlying index provides a Total Market Representation Ratio of 86% as of 19 September 2024.
Note that this data is backtested and is therefore not representative of a live index. Please note past performance should not be relied upon for future results.
How to Invest
Investing in the CoinShares Finanzen.net Top 10 Crypto ETP is straightforward and accessible. The ETP is listed on Xetra, and can be bought and sold through your existing broker.
Once you have logged into your online broker’s account or app, only 3 steps are required:
Search for the product name (CoinShares Finanzen.net Top 10 Crypto ETP), ISIN code (GB00BMY36D37) or ticker (CFTN).
Choose the notional amount or number of securities you wish to buy.
Place the execution order.
You can then easily monitor the ETP’s performance in your portfolio.
Conclusion
The CoinShares Finanzen.net Top 10 Crypto ETP offers a secure, transparent, and efficient means to invest in the top 10 digital assets by market capitalisation. By combining CoinShares' expertise in digital asset management with finanzen.net's market influence, this ETP provides a robust investment vehicle designed to meet the highest standards of security and transparency.
Whether you are an experienced crypto investor or new to digital assets, the CoinShares Finanzen.net Top 10 Crypto ETP is a compelling potential addition to any diversified portfolio.
