ETF vs. Index Coin — choosing a tool to invest in crypto
To provide effective use of capital, there are many tools available in finance. Their yield levels, risks, durations, legal regimes, etc. vary. Stocks, bonds, indices, or exchange-traded funds (ETFs) could be particular examples of such instruments.
The cryptocurrency market, brings a new spin on how to invest — does it require complicated mining available to tech pros only? Is it buying crypto on various exchanges? Is it purchasing ETFs (not many approved so far..)? This area still lacks detailed legislative regulation, mandatory tax administration, and the possibility of coercive enforcement because of its decentralization nature and relatively short lifespan. Crypto industry is offering its own regulation through a smart contract system (with programmable enforceability and action) and a combination of decentralized and centralized platforms and services available.
In our previous article, we described how indices are formed and what crypto indices exist on the market now. The C100 index coin, apart from being a crypto market capitalization indicator, acts as a digital exchange-traded fund (ETF), providing access to a broad portfolio of tokens selected in accordance to a transparent methodology and monthly rebalanced.
In traditional markets, the typical way of investing in an Index would be through an ETF instrument. The differences between the an index and an exchange-traded fund are:
1. quotation features (during or at the end of a trading session);
2. underlying collateral ( index does not imply real ownership of assets, unlike a fund);
3. the possibility of splitting and purchasing constituent parts (shares of the fund would represent the ownership of the index constituents);
4. fund pricing (index value corresponds to formulaic values of the constituent elements, while the fund may be priced above or below market).
The C100 Index Coin is representative of a new financial investment instrument, a new asset class. Based on the C100 Index — a comprehensive benchmark for the entire market (as it is composed of the most liquid and capital-intensive tokens similar to the classic S&P and DJI indices) — it is an innovative cryptocurrency that creates additional value through professional collateral management.
Crypto industry is traded 24/7 — that is 5x more versus traditional exchange operating hours. Significant volatility on the market suggests investor access to assets independent of the traditional market hours and exchange holiday days. It is only possible when the investment tool is a digital asset — not an ETF. We believe that security tokens — Index Coins — open a huge opportunity of fair market exposure to individual investors.
