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Apr 17, 2021

CF Benchmarks Recap - Issue 27

  • Evolve’s ETHR ETF set for launch next week

  • CF Benchmarks-powered ETF applications keep coming

  • Updated BRR research backs its integrity and replicability

Evolve’s ETHR ETF on the slate
New Bitcoin all-time highs, the most liquid crypto-related equity asset and the next stage of Ether’s evolution converged this week. Proponents of the ‘Bitcoin could still be banned’ hypothesis did manage to claw back some ground: Turkey’s CBRT took action to prevent ‘irreparable’ economic damage (after recently hiking its main rate 200bp to 19%). All the while though, the highest capitalised cryptoassets were buoyed near recent peaks. As U.S. markets rounded out the week, the CME CF Bitcoin Real Time Index hovered close to Wednesday’s $64,858.1 top: timestamp 14/04/2021, 06:14:08 UTC. The potential resumption of the series of Bitcoin zeniths that began late last year coincided with the year’s biggest equity offering so far. Coinbase’s direct listing came complete with a widely anticipated ‘pop’, just shy of the frothiest expectations. Most importantly, the floatation was the closest thing to a Wall St debut that the digital asset class will see for a while, as well as a template for the likeliest next crypto exchanges to go public, led by Kraken—judging by comments from CEO Jesse Powell. No less pivotal, Evolve ETFs edged ahead of rivals with Friday’s announcement of what’s set to be the world’s first Ether ETF (ticker: ‘ETHR’, pending TSX approval). Like Evolve’s Bitcoin ETF, ETHR will be underpinned by one of the most rigorously regulated and best-trusted crypto benchmarks. ETHR daily NAV will be calculated with reference to the CME CF Ether-Dollar Reference Rate. Meanwhile, Canada’s crypto ETF hotbed remained in full effect. The OSC reportedly approved two further Ether ETFs on the same day. The crypto ETF train continues below, including another application to offer a Bitcoin ETF with CF Bitcoin Settlement Price (US Close) as its pricing mechanism.

Change of shirt for Kryptoin’s ETF plan
Kryptoin’s revived Bitcoin ETF application was the highlight of prospects that the biggest prize—SEC-approval—could soon be landed. The Delaware-based firm filed an amended S-1 form, following an initial application in 2019. The name of its intended fund, Kryptoin Bitcoin ETF Trust remains the same, but the planned listing venue has changed to Cboe’s BZX (formerly NYSE Arca) and the fund will now use CF Bitcoin US Settlement Price as reference price.

Gensler in the hot seat
An implied vacuum in top-level policy at the avidly eyed regulator ought to be filled soon following confirmation of Gary Gensler as the SEC’s new chair. A comfortable 53-45 Senate vote enables Professor Gensler to back up his pledge to grapple with the task of defining a clearer approach to digital assets, with a particular focus on classification.

Introducing ‘Crypto Investor’ from TheStreet
For an extended selection of institutional crypto news, we recommend TheStreet’s new ‘Crypto Investor’ newsletter. We like its weighty editorial pedigree and no-nonsense approach to disclosure and price verification. The newsletter will “tell you about any crypto we hold worth more than $500”, and “calculate figures using CF Benchmarks, the institutional standard for crypto pricing”.

The Returns: Nasdaq Crypto Index Settlement
Among CF Benchmarks’ newest indices, the NCIS portfolio index affords a striking reference of the asset class’s advance. With one additional asset than the similar Ultra Cap 5 index—which doesn’t have a published once-a-day settlement price—NCIS’s near 240% return since its inception on 1st December 2020 at the value of 1000, still owes most of that gain to a current weighting of 78.61% to Bitcoin.Screenshot-2021-04-17-at-01.43.27

Featured benchmarks: CME CF Bitcoin Reference Rate

BRR Power: updated research backs the index again

Those familiar with the research on the CME CF Bitcoin Reference Rate (BRR) published last crypto price news, commentary and more year probably won’t be surprised that an update of the analyses based on more recent price data corroborates the original findings.

Still, it was an update well worth doing.

For one thing, with the earlier BRR Constituent Exchange data covering the stretch between January 2019 to November last year, the time elapsed since then obviously offers a rich data seam to be mined, particularly given Bitcoin’s near- 500% return between October and March.

More to the point, taking the opportunity offered by the passing of time to update the analyses would strengthen the conclusions drawn in the December paper, regarding the market integrity, representativeness, and replicability of the BRR.

Ultimately, demonstrating that the BRR continued to meet the most stringent standards of those qualities underpins the stated aim of the research in the first place: to validate the BRR as a superior reference price for providers of regulated Bitcoin financial products, chiefly ETFs.

In fact, since the initial publication, several ETF providers – like Evolve in Canada and QR Asset in Brazil - have affirmed the BRR’s watertight qualities by launching Bitcoin ETFs based on the BRR. Others have applied to regulators to launch Bitcoin ETFs based on the BRR, or one its regulated benchmark sister indices, like the CF Bitcoin Settlement Price (US Close), with which WisdomTree will power its WisdomTree Bitcoin Trust.

As well, the largest and most established institution with products referencing the BRR – the CME Group, with its Bitcoin futures and options contracts, has announced that it will launch Micro Bitcoin Futures (MBT) in May. One-tenth the size of CME’s existing Bitcoin Future contract, MBT will offer increased efficiency and cost effectiveness to institutional traders whilst also providing easier access to individual participants.

The steady increase of assets referencing the BRR is a further reason to re-examine the capabilities of the regulated benchmark with updated data.

Thankfully, the latest data reconfirm that the BRR is a solid benchmark price on all three of the crucial qualities examined in the original paper and the updated version.

Read the rest of this article on our blog.