It looks like FTSE Russell, the organisation behind some of the biggest indices in the UK, is planning to create a ‘crypto index’.
Here’s everything you need to know about the organisation’s plans, including what will be included and what it means for cryptocurrency.
What is going on with FTSE Russell and crypto?
According to CityAM, some intriguing plans are in the works. FTSE Russell, the creators of fan-favourite share indices such as the FTSE 100 and FTSE 250, is planning a fresh new release – a ‘crypto index’.
The idea is that this new index will track the performance of some of the best-known cryptos available. Right now, there are actually three separate FTSE Russell digital asset indices tracking:
- Bitcoin (BTC)
- Ethereum (ETH)
- Cardano (ADA)
But, in my opinion, an index has to contain more than one asset to give an interesting market view!
Why is a crypto index being created?
FTSE Russell’s expansion of crypto-tracking is to provide information to the growing number of retail and institutional investors putting money into the space.
Even those without skin in the game often share an interest in the crazy market movements. A significant index expansion will provide useful data and insight into these digital markets.
Basically, FTSE Russell is giving the people what they want – a simple way to track the major crypto players.
Which assets will be included in the crypto index?
This is the golden question. The CityAM report says that 43 assets have made their way through the vetting process. So, could this new index go by the catchy name of the ‘FTSE Crypto 43’?
It seems as though FTSE Russell is happy to include however many assets make it through the vetting process, but the vast majority of the 11,000 known digital assets are likely to be excluded.
That said, no one really knows the criteria they are using to judge the assets they’re looking at. There could end up being more than 43 on the index – only time will tell.
Can you invest in this index?
Right now, there are no index funds or ETFs (exchange-traded funds) in the UK based around cryptocurrency.
A hard battle is being fought in the US right now for the approval of a proper Bitcoin (BTC) ETF. But this is looking unlikely to happen in the near future.
This new crypto index may end up becoming an official blueprint for investors buying digital asset investment funds. But that’s probably not going to be anytime soon.
I will be curious to see if any investors copy the FTSE format and apply it to their portfolios for a DIY crypto index investment.
What does this mean for the future of crypto?
This is definitely an interesting step towards legitimising cryptocurrencies. However, this is only going ahead because of demand and interest. The fact that many people are curious about the performance of digital assets does not make them safe or legitimate investments.
If you’re an investor, there are ways to get exposure to the space without having to hold tokens themselves. This could be by buying shares in public companies such as Coinbase (COIN), Tesla (TSLA) and MicroStrategy (MSTR) – all of which have levels of crypto exposure.
Instead of worrying about digital wallets and lost keys, you can hold these investments safe and sound in a stocks and shares ISA account that can mean not having to pay tax on your gains.
Investing in Cryptocurrency is extremely high risk and complex. The Motley Fool has provided this article for the sole purpose of education and not to help you decide whether or not to invest in Cryptocurrency. Should you decide to invest in Cryptocurrency or in any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
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