State Street been appointed as the administrator of a planned bitcoin-backed exchange-traded note (ETN) initiated by Iconic Funds BTC ETN GmbH, further entering the digital asset space.
The second-oldest continually operating United States bank will support the issuance of the ETN by calculating the net asset value of the bitcoin portfolio consuming crypto market data from various crypto depositories. The ETN will be listed on the Frankfurt Stock Exchange, following the approval by BaFin.
Iconic was launched in 2019 to manage and issue crypto asset index investment products, offering passive and diversified exposure for investors, via its subsidiaries.
Patrick Lowry, Chief Executive Officer at Iconic, said: “When preparing our product, we focused on partnering with only ‘Tier-one service providers’. State Street’s history and expertise in digital assets and knowledge of client requirements will be vital as we embark on this journey and on future crypto related products.”
Nadine Chakar, head of State Street’s Global Markets business, commented: “The digital asset ecosystem is gaining significant momentum and is leading to a growing pipeline of cryptocurrency related administration services. We’re delighted to be collaborating with Iconic Funds and to continue to evolve our important servicing needs as part of our broader strategy for the crypto and digital assets environment..”
Institutional trading is the final frontier for the institutional adoption of cryptocurrencies. State Street will work closely with the other service providers chosen by Iconic who have been selected to store bitcoin and manage its operational risk: Coinbase Custody and Fidelity, among others.
Drew Robinson, head of Institutional Coverage, EMEA at Coinbase, added: “As we embark on building an open financial system enabled by crypto, we’re delighted to work with Iconic and other service providers such as State Street and Fidelity. Coinbase Custody holds assets in offline cold storage providing maximum security, is a qualified custodian, and licensed to custody assets through a separate trust company.”
Chris Tyrer, head of Fidelity Digital Assets in Europe, said: “Institutional interest in Bitcoin had been steadily increasing for several years, but the pandemic has served as a catalyst, drawing even more demand from this investor segment, due to the unprecedented levels of monetary and fiscal stimulus and the attractiveness of a fixed supply uncorrelated asset. The maturation of the digital assets ecosystem has been integral to supporting the demand in the marketplace in response to this strong global macro narrative.”
State Street has been actively engaged in the digital asset space for a number of years and its currencies trading platform Currenex has recently agreed to set up the Pure Digital platform, with trading commencing in 2021.