FTX crypto ETPS suffer steep losses

Investors in three funds for digital currencies run the risk of being wiped out because the crypto exchange FTX is about to collapse.

The trio of the stock market-traded products is only invested in FTT, the digital token of the FTX platform, which has broken down by more than 80 percent this week, because a rush to FTX raises doubts about its survival.

The Vaneck FTX TOKENGE Exchange Traded Note (VFTX), the 21Shares FTX TOKEN ETP (Aftt) and the Coinshares FTX Physical FTX TOKEN ETP (CFTT), according to Morningstar Direct, had a combined assets of EUR 27.7 million this year.

The products are noted on several continental European stock exchanges and approved in the EU and Switzerland, but not in Great Britain or the USA.

The consequences of the meltdown at FTX also require their tribute from a number of other cryptocurrency ETPs, especially those that have been invested in Solana, which has been collapsed by 47 percent since Monday, since it is speculated that FTX has to sell its great participation in the token to organize vital funds.

Bitcoin fell by 18 percent in the same period. The ProShares Bitcoin Strategy ETF (Bito), the world's largest crypto ETP, recorded a record trade volume with 49.3 million stocks worth $ 576 million on Tuesday in the middle of the chaos, 64 percent more than the previous record.

The volume increase for Biti, the proshares short Bitcoin Strategy ETF, a bet at a falling price, was 366 percent higher than on any other day since its introduction, whereby 7.2 million stocks worth $ 288 million changed owners.

Some will probably criticize ETP providers, supervisory authorities and stock exchanges that were happy to enable products to access FTT, a digital system, make coin easier to maintain Coin.

"Many of these vehicles [Crypto Etps in General] were created only to legitimize cryptocurrencies and bring them to the mainstream financial system," said Kenneth Lamont, Senior Fund for passive strategies at Morningstar.

"We always warned of this. Just because something is in a packaging and you can buy it on a platform does not mean that it meets all the requirements you would expect from other financial instruments," he added.

However,

ETP providers defended their decision to offer these products.

"When we looked at this, FTX had an excellent reputation. In retrospect, it is an unfortunate reality that FTX has problems," said Townsend Lansing, product manager at Coinshares.

"Our products are designed so that they are pursuing the price one to one Coinals If the coin rejects, they will do that," he added.

lansing rejected all the suggestions that Coinshares should not have offered a FTX product due to the associated risk for investors, and argued that "this is not a standard mainstream financial services that are adhered to".

"We believe that we develop transparent, well -regulated products and give investors the opportunity to make the decisions they want to make," he said. "We expect [investors] to have a certain level of understanding and assessment of the risks."

Eliézer Ndinga, research director at 21Shares, said Aft "should follow the daily returns of the underlying token.

more generally, said Ndinga, that the crypto industry was "influenced by the global economy. It was a hard year for many risk systems, not just for crypto".

lamont said that the episode associated with the wider crash of the cryptom market could be viewed as justification for the measures of the British Financial Conduct Authority, which consistently spoke out against the introduction of crypto -based ETPs.

"I am sure that an enormous pressure was exercised on the supervisory authority. London's position as a global financial center was questioned and that has been done [London] In the past 30-40 years, the deregulation and the introduction of new products was so successful," said Lamont.

“To a certain extent, they can be justified to stand and wait on the sidelines."