Can cryptocurrencies trade like traditional asset classes? via FTSE Russell, An LSEG Business, has developed a solution to address investor demand for benchmarks that accurately capture and track the performance of these assets. The FTSE Digital Asset Indices cover crypto digital assets, allowing for integration into traditional portfolio analysis and processes.
Investors have four traditional ways to invest in crypto, based on their institutional arrangements, fund restrictions, and other rules. They can purchase Bitcoin or Ethereum outright, invest in listed exchanges, derivatives or proxies such as listed stocks, or miners that trade on stock exchanges.
Risk management is crucial in this space. FTSE Russell evaluates each exchange quarterly and vets them on qualitative measures such as location, licenses, regulatory oversight and compliance, and proper documentation. On the qualitative side, exchanges are evaluated for the data coming in such as trade volumes, signs of manipulation, and other transparency measures.
For more insights on how your firm may navigate this new environment from a regulatory and risk management perspective, reach out to RFS Consulting for an initial consultation.
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