On 22 November 2018, there was a first at SIX Swiss Exchange: Swiss-based startup Amun AG obtained the first license worldwide to offer an Exchange Traded Product (ETP) based on multiple crypto-currencies on a regulated stock exchange. The ETP gives investors access to a diversified, weighted and automatically re-balanced basket of the top four most liquid crypto-assets: Bitcoin, Ripple, Ethereum and Litecoin. Each cryptocurrency was allocated a certain share within the fully secured ETP, with Bitcoin representing around half of the ETP’s assets. The ETP will allow both institutional and retail investors to take a position in the broader cryptocurrency market rather than investing in specific currencies.

An amount of cryptoassets equivalent to the customers’ investment in cash is acquired and held by a custodian on the customers’ behalf. Amun AG pledges to adhere to the same strict guidelines that apply to traditional ETPs.

As an ETP, the product does not qualify as a collective investment scheme under Swiss law. It is therefore not subjected to the strict regulation of the Collective Investment Schemes Act (CISA) and not directly supervised by the Swiss Financial Market Supervisory Authority FINMA.

According to the assessment of Thomas Zeeb (quoted by Reuters), who serves as head of securities and exchanges at SIX, conventional stock exchanges will be replaced entirely by blockchain-based digital exchanges within a decade due to the latter’s cost advantages.

Conversely, in the United States, the Securities and Exchange Commission has, so far, refused to approve similar products. The pressure on other stock exchange operators in Europe to follow the Swiss example seems likely to increase given investor demand.

Author

Yves Mauchle is a Partner in Baker McKenzie Switzerland's Corporate Finance department and acts as Co-Head of the Firm's Swiss Capital Markets Practice Group. He joined the Firm in 2011 as a trainee lawyer and rejoined as an associate in 2016. Prior to his return, Yves worked as an associate lecturer and researcher at the University of Zurich in the Research Priority Program "Financial Market Regulation." He was awarded the Professor Walther Hug Prize and the Issekutz Prize for his dissertation in the field of bank insolvencies (resolution). Yves completed a four-month full-time secondment with UBS, further developing his knowledge in the areas of bank regulation and capital markets.