Crypto Fund AG recently announced they are introducing the “world’s first diversified cryptocurrency fund”, which is touted as a legitimate investment outlet for professionals. The press release states that it is regulated and controlled. This provides it with more respectability and acceptance and transparency.
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The CEO of Crypto Fund AG, Jan Brzezek, provided an overview of the fund: “We recognized the growing demand of qualified investors for a regulated and transparent gateway to cryptocurrencies and realized that we need to adopt this new underlying to a proven and recognized legal framework allowing qualified investors to invest in cryptocurrencies. Unlike the Coin ETF, which was rejected by the SEC, we use the regulated and proven Swiss fund structure according to KAG, where the asset manager, the fund management company and the custodian bank are legally separated from each other. The fund will be highly diversified and will not list on an exchange and exclusively target qualified investors.”
Private Fund versus Exchange-Traded Fund
On the surface, the fund looks like an ETF that is finally emerging and bringing regulatory investment legitimacy into the crypto ecosystem. However, the press release was not entirely clear, because it was mistaken as an ETF by some Redditors. In a popular Reddit post, a user said, “The Swiss want to create the first regulated cryptocurrency ETF. The article explains how the legal status of cryptocurrencies in Switzerland will ease approval of an ETF.”
However, that turned out to be less than true. The Switzerland-based article clarified the fund, detailing that it is a non-listed fund, “very diversified,” and only addressed to qualified investors. The article read:
The Crypto Fund will be based on a crypto-currencies index that has not yet been chosen, it will be ‘very diversified’ and will respond to the ‘growing demand from qualified investors for a regulated and transparent gateway to crypto-currencies.’ Not listed, it is addressed exclusively to qualified investors.
A Brief History of Cryptocurrency ETF’s Rejections
For most investors and crypto-enthusiasts, it does not come as a huge discovery that Crypto Fund AG did not create a government regulated ETF. The history of ETF’s for cryptocurrencies has been dismal. There have not been approvals for ETF’s in the United States or many places elsewhere. For instance, the Coin ETF was recently rejected by SEC. They rejected a rule change for Bats BZX Exchange’s Coin ETF. They also rejected rule changes for Solidx Bitcoin Trust.
Kevin Helms, writing for Bitcoin.com, explained what would happen to the Solidx request before it occurred, saying, “The chance that significant markets for bitcoin will be regulated in the near future, if at all, is slim. The wider Bitcoin community has already come to understand this, and expects the Commission to reject the proposed rule change for Solidx Bitcoin Trust, as evident in chat rooms and forums online.”
The reason governments and regulatory agencies continue to reject these ETF’s is because they believe there is not enough broad regulation and surveillance concerning cryptocurrencies. For a fund to be widely accepted as an ETF, various organizations would have to agree to surveillance-sharing protocols and procedures, and this does not appear to be a possibility in the near future. For now, exchange-traded notes and private funds like Switzerland’s Crypto Fund AG will have to suffice.
What do you think about the future possibility of a publicly listed cryptocurrency ETF? Let us know in the comments below.
Images via Shutterstock, startuppicker.ch, and fortune.com
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