Cryptocurrency assaulting structured products :

New forms of investment in cryptofinance are developing, often at the initiative of banks. They remain for the moment confined to bitcoin and are not without risks

Cryptocurrencies are just beginning their financial development. The number of currencies is proliferating and derivatives - futures - have been launched in the United States. At the same time, banks have started to offer structured products, especially in Switzerland, for investors who would like to invest in these new assets, whose growth was spectacular last year - a little less since - without having to buy them. This may seem paradoxical for currencies that position themselves outside the traditional financial system and are simple to acquire. At least, unlike stocks, which do not require a bank account. Just download a digital wallet.

Protection against hackers
For Antoine Verdon, entrepreneur and investor, "we are in the process of replicating certain mechanisms from traditional finance and transposing them into the crypto domain. This may have different purposes, such as allowing people who do not wish to venture to benefit from their development or hedging against certain risks, such as volatility. "

Several Swiss banks have tried to profile themselves in this niche, almost all by posing as "the first" to launch a specific type of products. Among them, Vontobel already has a handful. There are two publicly traded participation certificates: one on bitcoin and the other on cash bitcoin. The logic is simple, expose the expected rise in the price of the largest cryptocurrency without having to buy it directly.

Last October, the Zurich-based specialist bank for structured products also developed an open-ended tracker, ie a certificate of participation in bitcoin with an unlimited duration. The argument? With a certificate, "you do not run the risk of losing your bitcoins as a result of hacker attacks, technical problems, improper handling or the default of the depository of bitcoins," said a statement. In exchange, investors must pay a management fee of 1.5% per annum. The certificate price is determined by the bitcoin / dollar exchange rate and bitcoins are traded on three exchanges (CoinBase, Kraken Bitcoin and Bitstamp). Finally, Vontobel has five "Short Mini Future", which allow to bet on a decline of bitcoin with a leverage effect. In 2017, these listed products recorded a volume of approximately 330 million francs. For now, the bank focuses on bitcoin, which remains the most traded currency, but it is interested in other currencies, including the ether.

With leverage
Leonteq also has a tracker. Swissquote has also developed an active management certificate for bitcoin listed on the Swiss stock exchange. Its particularity is to count an algorithm based on machine learning which anticipates the evolution of the bitcoin price by collecting information from several sources (average of changes, volatility, market sentiment, etc.) and thus adapts the wallet . To reduce volatility, the product can reduce the proportion of bitcoin - which must however represent at least 60% of the portfolio - and increase the dollar share. "Our strategy is designed to limit volatility by increasing the share of traditional currencies during periods of uncertainty and downturn," explains Peter Rosenstreich, Head of Market Strategy at Swissquote. The online bank does not give figures on the amounts invested in this certificate, but is "happy" with the volumes processed. It does not exclude the creation of certificates on other currencies but focuses for the moment on direct brokerage.

These developments are not without danger for users, warns Antoine Verdon: "By creating structured products with no underlying value, we are moving away from the principles of the blockchain and creating a risk for users: futures on bitcoin are not covered, as much of the gold investment is not covered either. "