There’s been another substantial shift in the mainstream financial sector in the direction of “cryptocurrency is a real thing” and this time, it’s about Ethereum.
On October 11, CoinShares announced the launch of a new exchange-traded note (ETN) based on ether, the token behind the Ethereum blockchain. Bigger news: it would be open to investors on NASDAQ Stockholm.
This will be the first mainstream investment product based on Ethereum, a currency that’s all about bringing blockchain to the world.
Short version (long version here): there are ETNs and ETF’s. That would be “exchange-traded notes” and “exchange-traded funds.” The TL;DR on the difference is that to offer an ETF you actually have to own the asset in question, paying up on investments as they mature.
For an ETN, you just issue a note based on a given asset, committing to pay the return on investment when the note reaches maturity.
Obviously having to actually own the asset you’re offering for investment is a challenge with a resource like cryptocurrency, since it’s owned by a squillion people who may or may not be interested in your would-be investor’s shiny money.
ETNs provide a clearer way for cryptocurrency to interact with conventional finance. The investor invests in a given currency, the underwriter commits to pay the profits.
And if you decide magic robot money isn’t your thing, ETNs can also be bought and sold on the open market before they mature. Simple.
CoinShares certainly thinks so, and that counts for something. To begin with, this isn’t their first rodeo. The group of companies they represent already issues two ETNs and administers a regulated hedge fund based on bitcoin.
Also, maybe more importantly when it comes to cryptocurrency’s role in the financial marketplace, they’ve got serious cred in conventional finance, with vets of JPMorgan, Lehman Brothers and State Street on the team.
By bringing Ethereum to NASDAQ, CoinShares is showing an ongoing commitment to making cryptocurrency a working part of modern finance. Whether that bet pays off remains to be seen, but it’s one of the strongest moves to date toward bringing blockchain to the financial world.