ETPs are collateralized debt obligations that are guaranteed by the asset basket at 100%. The underlying crypto assets are held in an offline wallet, also called “cold storage.”
In the case of Hashdex’s ETPs, the securities will be issued by Hashdex’s Swiss subsidiary, Hashdex AG. The crypto assets that serve as the underlying or underlying components of the relevant series of ETPs will serve as collateral for the ETP and will be held in separate wallets of the issuer custodied by independent custodians.
For Swiss resident individuals, the sale or other disposal of a unit of ETP held as part of his or her private assets is a tax-free private capital gain (unless such individual is classified, for income tax purposes, as a “professional securities dealer”).
A holder of a unit of ETP who is not resident in Switzerland for tax purposes, and who during the taxation year has not engaged in trade or business carried on through a business operation or permanent establishment in Switzerland, will neither be subject to income tax and capital gains tax nor net wealth or capital tax in Switzerland.
ETPs are structured and operate similarly to traditional Exchange Traded Funds (ETFs). However, while ETFs are funds, ETPs are not but rather are collateralized debt securities issued by Special Purpose Vehicles (SPVs) that are typically domiciled in an offshore center. These SPVs are not regulated under the UCITS regime and/or any Swiss of foreign regulator for collective investment schemes.
Exchange Traded Products (ETPs) are non-interest paying collateralized debt securities designed to replicate the performance of an underlying index or asset, by either directly buying and holding those same securities or assets (physical replication) or by entering into a contractual agreement (i.e.,a swap contract) with a counterparty that is obliged to provide the daily return of the underlying index or asset (synthetic replication).
Since crypto is a relatively new asset class, there are still many issues investors face when investing directly, such as: custody, security, protecting private keys, opening external wallets, tax filings, and others.
At Hashdex, our mission is to bring crypto opportunities to the mainstream. ETPs level the playing field for a broad range of investors to access alternative asset classes at a lower ticket size and directly from a brokerage account. The product has a liquid structure and can be bought and sold on secondary markets throughout the day.
In addition, ETPs are regulated by the exchanges they are listed on, such as the SIX Swiss Exchange. Entire portfolios are available daily and prospectuses provide additional transparency.
Lastly, ETPs provide a higher level of cost and tax efficiency when compared to investing in mutual funds, conventional debt instruments, or holding the underlying assets directly. ETPs track indices and do not bear the costs of discretionary/active portfolio management. In addition, the products have lower portfolio turnover and the ability to do in-kind redemptions, which allows investors to incur capital gains tax only when the position is sold.
The process that enables an ETP to offer the return on a diversified basket of securities is commonly referred to as the “create and redeem mechanism.” The creation/redemption mechanism keeps prices in line with the underlying assets and is an efficient and fair way to acquire new securities.
If the Authorized Participant (AP) wants new products (units) of a series of ETPs they have to acquire, in the correct proportion, all the underlyings the ETP wants (or, for reasons of collateralization has) to hold. The AP then delivers this basket of underlyings or underlying components to the issuer in exchange for units of the relevant series of ETPs. The AP can then sell these ETP units to regular investors on the open market. This process creates units of the ETP.
The process can also run in reverse to redeem units. The AP delivers units of ETPs, and gets all of the relevant underlyings or underlying components, which can then be sold on the open market.
Learn more about this process here.
The prospectus for the Hashdex’s Exchange Traded Products Issuance Program, under which the Hashdex Nasdaq Crypto Index Europe™ ETP is issued, has been approved by SIX Exchange Regulation AG as a Swiss prospectus review body and permits the offering of our product to the public in Switzerland and admission to trading on Swiss trading venues and, once the necessary requirements are in place, other regulated markets.
Hashdex uses the best market practices for asset security and fraud prevention. Our qualified custodians developed multiple measures to ensure the security of the underlying assets, such as:
Crypto assets are stored in high technology deep-cold storage units, which are systems completely disconnected from the internet;
The administrator and asset custodian have to authorize transactions, Hashdex does not have access to any private keys;
Geographic distribution is used for private keys (sharding);
Insurance policies are in place against theft, private key loss, and fraud;
Daily direct transactions with market makers and over-the-counter (OTC) desks;
Assets are never stored on exchanges (maximum 24-hour stay during rebalancing, subscriptions and redemption);
Crypto assets are screened for anti-money laundering (AML) purposes upon receipt and units are only created if the risk assessment is acceptable, mitigating risks of receiving funds from bad actors.
Authorized Participants (APs) are the only parties that can purchase units directly from Hashdex AG by delivering the relevant underlyings in-kind. Our ETPs are served by reputable players approved according to Hashdex’s rigorous Know-Your-Product (KYP) Assessment by the Risk and Compliance teams.
Cumberland DRW LLC is a member at FINRA and holds a Money Service Business (MSBs) license pursuant to the Bank Secrecy Act (BSA), under the oversight of the Financial Crimes Enforcement Network (FinCEN);
Flow Traders is registered and regulated by the Netherlands Authority for Financial Markets (Autoriteit Financiële Markten);
Jane Street is a member at FINRA and holds a MSB license pursuant to the BSA, under the oversight of FinCEN.
Hashdex uses the best market practices for asset security and fraud prevention by using institutional-grade custody to protect assets under management. Our custodian is Coinbase Custody Trust Company LLC, a New York State-chartered Trust which is authorized to provide fiduciary custodial services to institutional customers. As the leading mainstream crypto exchange in the United States, Coinbase has become a standard on-ramp for new crypto investors. The company offers a wide variety of products including cryptocurrency investing, an advanced trading platform, custodial accounts for institutions, a wallet for retail investors, and its own U.S. dollar stablecoin.
Any complaints about the sale of ETPs should be made directly to your broker or platform provider. Other complaints should be made via email to email@example.com. Making a complaint will not prejudice your right to take legal action.
Individuals can buy or sell our ETPs on exchange or directly with a bank or broker over the counter. Our products can be found through their corresponding ISIN, symbol, WKN, or Valor at an eligible financial intermediary.
The Hashdex Nasdaq Crypto Index Europe™ ETP is currently listed on the SIX Swiss Exchange. In a later stage, we plan to have it eligible for an offering in the European Union and listed in the following exchanges: Deutsche Borse, Xetra, Euronext Paris, Euronext Amsterdam,and Nasdaq Nordic.
If our products are not available on a specific platform, contact your financial intermediary to request access.
The market price of ETPs tracks the equivalent value of the underlying asset and is close to the net asset value (NAV). However, since the market price is determined by supply and demand in the secondary markets, there may be a premium or a discount relative to the NAV.
The NAV is considered to be the fair value of the underlying asset. Therefore, the daily NAV is calculated using the relevant price index at the end of the day.
For more information on pricing methodology, please refer to our product pages.
The Total Expense Ratio (TER) for Hashdex’s ETPs is 1.49% per annum.
In addition, because ETPs are bought and sold like stocks or other classic financial instruments, the usual transaction costs charged by brokers may apply. These are independent of Hashdex and are charged by your bank/broker.
For more information on fees, please refer to our product pages.
Dedicated to bringing crypto opportunities to the mainstream, Hashdex partnered with Nasdaq to co-develop the Nasdaq Crypto Index™ (NCI™) and Nasdaq Crypto Index Europe™ (NCIE™), which are designed to broadly track this rapidly growing asset class. These indices serve as trusted benchmarks for crypto asset investing.
Assets represented in the NCI and NCIE are subject to strict eligibility requirements to guarantee asset legitimacy, institutional-grade custody, and meaningful market representation. The indices are rebalanced quarterly.
For more information on methodology, please refer to our product page.
The iNAV is a measure of the intraday NAV of an investment.
The minimum invested amount is the price of one ETP unit.
Hashdex offers ETPs that provide investors with access to listed products that track the Nasdaq Crypto indices and their underlying digital assets. The products are denominated in USD and tradeable in the trading currencies USD, CHF, EUR or GBP.
ETPs are senior secured debt obligations (perpetual, collateralized, and non-interest-paying) tracking the value of an underlying asset. Hashdex’s ETPs are collateralized by their respective asset baskets at 100%.
More information on our individual ETPs can be found on their respective product pages.
In order for eligible investors to access documents such as a Fact Sheet, Prospectus, Final Terms, KID, and others, please refer to our product pages.
Our ETPs are accessible to European professional investors and Swiss professional and retail investors.
Hashdex is a global crypto asset manager founded in 2018 to provide innovative investors access to the rapidly growing crypto economy. We do this by combining comprehensive education with simple, secure, and regulated investment products. Hashdex is the largest crypto asset manager in Latin America and operates the world’s largest crypto index ETF. We currently manage more than $750M for over 260,000 global investors. We are backed by leading venture capital firms and are a global team of more than 80 exceptional individuals based in Latin America, Europe, and the U.S. We believe open blockchains are unlocking economic growth and creating unprecedented opportunities for investors. Hashdex’s mission is to provide educational resources and best-in-class products that build pathways to prosperity by opening the crypto ecosystem to the world.
New bitcoins are created by a process called mining. Some network participants, called miners, perform energy-intensive computational calculations to provide security to the network. Mining is needed to validate and secure blockchain transactions because crypto assets are based on a set of rules, not trust between institutions or governments. As a reward for using their computational power to successfully validate transactions, miners receive newly created bitcoins in a special transaction for each block, which is called a “coinbase” transaction. Currently, participants who mine a block are remunerated with 6.25 new bitcoins. For every 210,000 blocks produced, or roughly every four years, the number of bitcoins created for each block is divided by two, in an event known as a “halving.”
As a blockchain’s user base grows, demand for its crypto asset increases. Bitcoin mining has become increasingly difficult as a result, requiring higher levels of computational power. This increase in mining difficulty is consistent with Bitcoin’s incentive structure—when its price rises there is a higher incentive to mine.
Ethereum is a blockchain-based open-source network like Bitcoin, but its use cases extend far beyond digital cash. Ethereum launched in 2015 as a decentralized computing platform and has powered well-known decentralized innovations, including decentralized finance (DeFi) applications and non-fungible tokens (NFTs).
The network’s native token, ether (ETH), is the second-largest crypto asset. Ethereum was the first platform to apply smart contacts (programmable rules that can self-execute without third-party verification) to a native blockchain.
A stablecoin is a crypto asset because it is blockchain-based. Unlike most cryptocurrencies, however, stablecoins maintain a stable value over time. A stablecoin is typically pegged to a reference like the US dollar or gold but can also derive value by programmatically buying or selling an underlying reference asset. A stablecoin’s goal is to avoid the price volatility inherent with most crypto assets and allow for a level of price stability that makes them usable day-to-day. Because of their stability characteristics and ability to settle more quickly than fiat currency transactions, stablecoins are often used for short-term transactions, such as buying and selling crypto assets on exchanges. They are also used in DeFi for lending services or liquidity for trading purposes.
Bitcoin’s launch led to the creation of other cryptocurrencies focused on the peer-to-peer transfer of value. Crypto innovators soon realized the distributed ledger technology used to record bitcoin transactions—the blockchain—could be used for a wide swath of applications, including legal agreements such as transferring real estate ownership or enacting a programmable financial contract. Today, the most common element that crypto assets share is the use of blockchain-based technologies to record transactions without a third party. Crypto assets include currencies like bitcoin, as well as many other types of cryptography-based tokens.
The term “smart contract” was created in 1997 by the computer scientist, lawyer, and cryptocurrency pioneer Nick Szabo to describe a contract that is purely implemented by computer systems. Smart contracts are self-executing contracts that can be written in programming code. They enable transactions beyond just value transfer, and are considered one of the most important applications related to digital assets.
A crypto asset is a completely digital currency or token that uses a blockchain to provide a medium of exchange. A key attribute is the use of cryptography, which allows two parties to securely send and receive data anywhere in the world without a trusted third party.
Bitcoin (capital “B”) is the network that hosts the world’s first cryptocurrency—bitcoin (lowercase “b”). Thousands of other currencies and tokens have launched since the first bitcoin was created in 2009, but bitcoin remains the largest, making up more than 40% of the total market cap for crypto assets. The Ethereum network token, ether, is the second largest with approximately 20% of the total crypto asset market cap.
Messari market cap data as of March 24, 2022
The simplest definition of a blockchain is a decentralized public ledger where transactions are validated by a network of compensated participants. A blockchain is composed of blocks that record information about transactions. Blocks are cryptographically interconnected so this chain serves as a reliable transaction record. Each block contains a synthesis of the information contained in the previous block (a “hash”), so that a network participant is able to validate the entire chain of blocks. This helps ensure the blockchain’s security by preventing anyone from altering transactions or taking control of the network.
Bitcoin’s blockchain was a novel idea due to the combination of technologies used to create a truly decentralized and immutable public ledger. Fully decentralized blockchains do not rely on any intermediary to confirm transactions and are not limited by geography, allowing for the elimination of gatekeepers from nearly any type of peer-to-peer transaction.
The first iteration of the web emerged in the 1990s with the internet but was static and lacked an interactive element. A second phase followed in the 2000s and included many multi-functional websites, applications, and social media platforms (e.g., Amazon, YouTube, Facebook).
Web3 represents the next generation of online connectivity and will be driven by blockchain-based applications and innovations. As this pivot toward decentralization unfolds, we believe crypto assets will facilitate the shift to a truly borderless, open internet that is accessible by all.
An investment portfolio is typically built around a diversification strategy aimed at providing a mix of assets with varying return characteristics. Finding assets that have low correlations to one another is key to diversification. Crypto, considered an alternative asset class because it falls outside of the typical stock and bond portfolio mix, can help bring the diversification benefits to a portfolio. Recent academic research shows that crypto provided diversification benefits in both stable and uncertain economic environments. Bitcoin has demonstrated low or negative correlations to other asset classes and a small allocation to bitcoin generally increases risk-adjusted returns without relevant changes to the risk profile.
This will vary according to each investor’s profile. According to a study by Nasdaq, advisors say the ideal allocation of digital assets is 6%. We recommend talking to your advisor before investing.
The larger the problem a technology solves, the greater its value. Crypto has properties that have a lot of value in our increasingly digital world. Each crypto asset supports different projects and software, with bitcoin being the most well-known. There are crypto assets in numerous segments of the economy aimed at improving the way we live.
Even though we are still on the beginning of the adoption curve of this technology, large global investors (such as the Yale and Harvard endowments, the Renaissance Medallion Fund, Paul Tudor Jones and others) are increasingly active in this market. The total crypto market cap is currently around $1.7 trillion, which is only a tiny fraction of other asset classes or the technology sector.