Blockchain technology is all about being control-free, but this brings up some challenges when it comes to investing in this market. If you want to target equities and want to hit a specific sector, it’s easy because you can just buy a sector exchange-traded fund that tracks a bunch of companies that are in that sector.
The time of complete Bitcoin dominance in the crypto market cap is long gone. There’s a $100 billion worth of altcoins and tokens. Specific coins and tokens are targetting certain sectors through blockchain technology. There’s enough quantity of tokens and coins that have a high daily volume that the crypto market has reached a good diversity of investable assets.
A Market Shift
Iconiq Holding is developing a platform for cryptocurrency asset managers. Fund issuers and managers can use the platform to create advanced investment products that are similar to what’s accessible to equity investors. The development aims to close the gap between the investment products available to equity investors and coin/token investors.
Iconiq Holding is going to enable fund managers and investment services to create tradeable derivatives that can be issued through the platform. Since Iconiq is pursuing regulatory approvals, these investment products would be enterprise-grade not just on the basis of complexity that can be placed in their market function, but also in terms of legal compliance. We could soon see legal issuances of sector funds and we could buy ETFs comprised of purely AI tokens, small-cap AI tokens, IoT tokens, small-cap exchange tokens, etc. The potential for the types of investment product can be created is huge. These are the types of investments products that could even bring small interest from major hedge funds; the legal compliance is the key factor.
It will be easier for Iconiq’s first launch to focus on ETFs that are based on more prominent coins, and it seems this is how things will unfold. Given that Iconiq’s partner, BITA, has an index that tracks the top coins by market cap, it’s nearly certain that the first ETFs issued on Iconiq Holding will be focused on major coins. The first investment products will be created through a Maltese PIF.
Looking at the Future
Many large financial institutions are looking for ways to enter the cryptocurrency market without taking on too much risk on themselves. Issuing investment products could be the golden opportunity. They can use their capital and expertise to create unique derivatives and then use Iconiq Holding to either sell the products to investors or to simply accept new capital and manage it through the platform.
Iconiq Holding could be a good middle-ground for professional funds and fund managers to connect with the investors in the cryptocurrency market, and it could also make it easy for them to allow new cryptocurrency-based investment products to their existing clients.
Iconiq is going to have a good impact on the complexity of investment possibilities in cryptocurrencies. There could, though, be an even better impact.
If Iconiq is used to create sector ETFs in the cryptocurrency market, we could see low-cap projects that have good products but low hype get new liquidity from the index funds. This easy access to liquidity should be available to the projects that are performing well and this would be a well-deserved reward for the teams that have been hard at work rather than absorbed with ways to pump their tokens.
You can check out Iconiq’s website for more information.