Market Overview

Institutional Investors Have A New Option For Crypto Exposure

Institutional Investors Have A New Option For Crypto Exposure

Institutional investors looking for exposure to the fast-growing universe of cryptocurrencies have a new vehicle to consider. On Tuesday, Bitwise Asset Management and Morgan Creek Digital, the digital assets unit of Morgan Creek Capital Management, introduced the Digital Asset Index Fund.

The new fund is targeted at endowments, pension funds, high net worth families and other high-level investors.

What Happened

The introduction of the Digital Asset Index Fund comes just days after Bitwise Index Services, the indexing arm of San Francisco-based Bitwise Asset Management, introduced three benchmarks providing coverage of the mid- and small-cap as well as total market segments of the digital currency universe. Bitwise Index Services now offers four crypto indexes.

Last month, Bitwise filed plans for the first publicly-offered cryptocurrency index exchange-traded fund, which would be known as the Bitwise HOLD 10 Cryptocurrency Index Fund.

Why It's Important

U.S. regulators have yet to approve ETFs based on bitcoin or any other digital currency, but the new Digital Asset Index Fund isn't structured as an ETF.

“The Fund holds a market-cap-weighted basket of the top 10 largest digital assets, reconstituted monthly,” according to a statement. “Assets must pass rigorous, rules-based eligibility requirements including custody qualifications, trade concentration limits and pre-mine restrictions to qualify for inclusion. All assets are kept in 100% cold storage—the best practice for security—and are audited annually.”

Bitcoin, the largest digital currency by market value, and Ethereum combine for 84.6 percent of the Digital Asset Index Fund's weight. Other top five holdings in the new fund include Bitcoin Cash and Litecoin.

What's Next

With more and more institutional investors mulling exposure to the cryptocurrency space, the Digital Asset Index Fund could potentially attentive audience, particularly if regulators continue rejecting bitcoin ETFs.

"Institutional investors are seeing the market pullback as an opportunity start building exposure to the space, and have been pushing us to get this fund to market quickly," said Morgan Creek Digital Partner Anthony Pompliano.

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