CoinMarketCap Launches CMC20 — Index Tokens Compete With Multi-Coin ETFs

Key Takeaways

• CoinMarketCap has launched a caller intex token.

• CMC20 tracks a handbasket of the apical 20 cryptocurrencies.

• Index tokens contiguous an alternate to off-chain multi-coin concern products.

CoinMarketCap connected Monday, Nov. 17, launched CMC20—a caller “index token” that tracks a handbasket of the apical 20 cryptocurrencies by marketplace capitalization.

The conception appeals to rising request for diversified crypto exposure, proposing an on-chain alternate to multi-coin exchange-traded funds (ETFs) and akin concern products.

CMC20 offers weighted vulnerability to the apical 20 cryptocurrencies, excluding stablecoins, wrapped tokens, and assets that contiguous concern challenges. (CoinMarketCap cited XMR, which is borderline amerciable successful galore jurisdictions, arsenic an illustration of a coin it would exclude.)

The caller token is designed to beryllium decentralized and permissionless, with issuance and redemption handled by Reserve Protocol, and trading present unrecorded connected PancakeSwap and Trust Wallet.

Described arsenic “crypto’s mentation of the S&P 500,” the scale is rebalanced astatine the extremity of each month, taking into relationship immoderate changes successful fertile and weighting. 

Meanwhile, S&P itself is getting into the crypto scale game, with plans to launch the S&P Digital Markets 50 Index (DM50).

Unlike CMC20, DM50 includes a substance of crypto and equity exposure, consisting of 35 publicly-traded crypto companies, positive 15 cryptocurrencies selected by S&P. A token tracking the benchmark is being developed by Dinari.

While each presents a antithetic attack to scale coins, CMC20 and DM50 stock the aforesaid underlying concept—diversified plus vulnerability successful token form. As such, they tin some beryllium viewed arsenic alternatives to much traditional, off-chain crypto trackers.

In Europe, CoinShares and 21Shares connection assorted multi-asset crypto exchange-traded products (ETPs). These scope from elemental offerings that harvester BTC and ETH vulnerability to much diversified altcoin ETPs.

In the U.S., the Securities and Exchange Commission (SEC) hasn’t approved multi-coin ETFs structured nether the Securities Act of 1933, which is the preferred way to ETF authorization.

However, successful caller months, companies including Grayscale and 21Shares person utilized an alternative structure nether the Investment Company Act of 1940 to debut caller products. 

Funds issued nether the 1940 Act can’t clasp 100% spot exposure, truthful they trust connected derivatives and crypto-backed securities instead. For example, caller ETFs launched by 21Shares connected Nov. 13 volition put successful the plus manager’s European ETPs.