With the total number of cryptocurrencies and digital assets on exchanges skyrocketing from 617 to 1,335 over the course of a year, 2017 has been dubbed the “Year of Cryptocurrency”. However, as these currencies exist on numerous exchanges and markets, all with different payment systems and methods, the ability to get in and out of positions has been difficult, time-consuming and potentially costly as timing is crucial when it comes to trading on the crypto market. Many investors, curious to dip a toe into the new asset class were scared off by this complexity and associated risk exposure.
The Need for Crypto Indices
Similar to traditional markets, the creation of indices allows the old-world finance markets to start viewing the new world currencies as a serious and viable investment opportunity.
By creating an index that is in the exciting and vibrant cryptocurrency space, while adopting a methodology that takes into account the needs and requirements of heavily regulated asset managers, banks, hedge funds and professional investors, opens the possibility of creating a much wider investor base in the cryptocurrency ecosystem.
Regulatory Compliance
Creating a cryptocurrency index is not enough, it is also important to factor in the regulatory and compliance requirements, as many sophisticated old-school investors are bound by them, and would prefer to have the same kind of clarity (or complexity) when it comes to new asset classes. Contracts created and listed, based on a well- thought out index will provide a simple, well understood and proven method for the financial community to consider the rapidly rising cryptocurrency ecosystem as a whole.
Multiple listings on both existing financial exchanges such as Eurex, or CME will allow the investor base to use current Fiat currencies to clear through existing clearinghouses using current risk, compliance, middle and back-office systems. In doing so, the index can be integrated into the trading and investment community in a relatively short span of time.
Crypto Indices are Increasingly being Produced
Some of the examples that show how mainstream financial players are listing the crypto index include:
- Financial monitoring service Bloomberg Terminal, now hosting the Huobi 10 Cryptocurrency Index, as well as 9 crypto trading pairs
- Toronto Stock Exchange is now listing the new Blockchain ETF
- Leading U.S. investment banking group Goldman Sachs is exploring cryptocurrency derivatives, as stated by Goldman Sachs Chief Operating Officer (COO)
- Canadian mass media and information company Thomson Reuters is now tracking the top 100 currencies in its sentiment data tool.
Given the huge weight of regulation that has landed on the financial community since the financial crisis, getting an index of high quality meeting regulatory standards such as the IOSCO Principles of Benchmarks, is vital for any chance of adoption by financial institutions
About the CryptoIndex Project
CryptoIndex is a novel platform powered by AI that has been developed to create the Cryptocurrency market benchmark, known as the Cryptoindex100. Their unique algorithm, ‘Zorax’ uses a wide variety of data inputs from an extensive number of sources to create a unique approach to the production of a fully automated index calculation. Based on these inputs (fed through neural networks) and calculations, each coin is constantly revalued as part of the Index.
The Background
The rising adoption of cryptocurrencies, crossing a market cap of $300 billion, necessitates such a platform as that figure is expected to hit $10 trillion in future. With more than 1604 cryptocurrencies found in the market, it has become almost impossible to predict the successful currency of the future. The CryptoIndex 100 helps the old finance market to view “new world” currencies as viable investment opportunities. Cryptocurrency market players have long desired a tool whereby every crypto investor, regardless of the level of knowledge, can automate and simplify the process of portfolio diversification. CryptoIndex, reduces the volatility and risk of existing individual cryptocurrencies and creates a smart new benchmark for the cryptocurrency market.
What the CEO has to Say…
CEO VJ Angelo is currently the head of London Derivatives Exchange (LDX). In his over 30 years’ experience in the financial markets, he has developed a thorough understanding of indices, financial products, and market infrastructure, notably in currency and fixed income markets. From 2012 he commenced a project that took fixed income OTC products onto exchanges.
In a unique new index methodology, as CEO of Global Derivatives Indices (part of the LDX Group), Mr. Angelo and his team took the process from concept through development into production and finally through regulatory approval in the UK, Europe, and the U.S. The result has been a listed futures contract for the Interest Rate Swap Index on the Deutsche Boerse owned Eurex Exchange.
The project’s MVP is already in place, unlike the other project’s statement of intent. And, the private sale of its CIX100 tokens is successfully going on since 5th of July, while the whitelisting is going to start from mid-July 2018. To participate or get whitelisted, please visit CryptoIndex’s official website.