Digital Asset-Focused Structured Products and Certificates in Europe

The world of finance has witnessed an increasing interest in digital assets, particularly cryptocurrencies.

The rapidly evolving digital asset landscape has led to the development of innovative financial products, such as structured products and certificates, which offer exposure to cryptocurrencies and other digital assets.

Let’s discover how structured products are being designed to provide access to digital assets, and discuss the risks and opportunities for investors in Europe and Switzerland.

The rapidly evolving digital asset landscape has led to the development of innovative financial products, such as structured products and certificates, which offer exposure to cryptocurrencies and other digital assets.

We invite to discover how structured products are being designed to provide access to digital assets, and discuss the risks and opportunities for investors in Europe and Switzerland.

Structured products are financial instruments that combine various assets to create a single, customized product. These products are designed to provide specific risk-return profiles, making them suitable for investors with different objectives and risk tolerances.

Certificates, a type of structured product, are issued by financial institutions and track the performance of a predefined basket of assets, which can include stocks, bonds, commodities, or even digital assets.

The Rise of Digital Assets

Digital assets, such as cryptocurrencies, have experienced significant growth in popularity and adoption over the last decade. With the increasing acceptance of cryptocurrencies as an asset class, financial institutions have started to create structured products that provide exposure to digital assets. These products enable investors to gain exposure to the potential growth and diversification benefits of cryptocurrencies without directly owning or managing the underlying assets.

Examples of Structured Products Focused on Digital Assets

1. 21Shares Crypto Basket Index ETP (ISIN: CH0454664001)

This exchange-traded product (ETP) issued by 21Shares is designed to track the performance of a basket of the top five cryptocurrencies by market capitalization, which include Bitcoin, Ethereum, Cardano, Solana, and Polkadot. By investing in this ETP, individual investors can gain exposure to a diversified basket of leading cryptocurrencies, allowing them to participate in the growth of the digital asset market.

Source: https://21shares.com/etp/21shares-crypto-basket-index-etp

1. Leonteq Tracker Certificate on the Bitwise 10 Large Cap Crypto Index (ISIN: CH1045683170)

This tracker certificate, issued by Leonteq, tracks the performance of the Bitwise 10 Large Cap Crypto Index. The index comprises the top 10 cryptocurrencies by market capitalization, providing investors with broad exposure to the digital asset market. The product offers a cost-efficient way for individual investors to gain exposure to the cryptocurrency market without the need to directly own or manage the underlying assets.

Source: https://structuredproducts-ch.leonteq.com/products/product?id=CH1045683170

Risks and Opportunities for Investors

Investing in structured products focused on digital assets presents both risks and opportunities for investors in Europe and Switzerland:

Opportunities:

1. Diversification: Investing in digital assets through structured products can provide portfolio diversification, as cryptocurrencies have demonstrated low correlation with traditional asset classes such as stocks and bonds.
2. Growth potential: The digital asset market has experienced significant growth in recent years, and many experts believe this trend is likely to continue. Structured products offer investors the opportunity to participate in the potential growth of the digital asset market.
3. Accessibility: Structured products allow individual investors to access the digital asset market without having to directly own or manage cryptocurrencies. This can simplify the investment process and provide a more secure and regulated way to gain exposure to digital assets.

Risks:

1. Volatility: Digital assets, particularly cryptocurrencies, are known for their high price volatility. This can lead to significant fluctuations in the value of structured products focused on digital assets.
2. Regulatory uncertainty: The regulatory environment for digital assets is still evolving, with potential changes in regulations posing risks to the value and liquidity of structured products focused on digital assets.
3. Security risks: Although structured products provide a more secure and regulated way to invest in digital assets, the underlying cryptocurrencies can still be exposed to risks, such as hacking, fraud, and technological vulnerabilities.
4. Counterparty risk: When investing in structured products, investors rely on the financial institution that issues the product to meet its obligations. Any failure on the part of the issuer could negatively impact the value of the investment.
5. Liquidity risk: The liquidity of digital asset-focused structured products may be lower than that of traditional asset-based structured products, potentially making it more difficult for investors to buy or sell their investments when desired.

When considering investing in structured products focused on digital assets, investors in Europe and Switzerland should take these factors into account.

The rise of digital assets has led to the development of innovative structured products and certificates designed to provide exposure to cryptocurrencies and other digital assets.

These products offer investors in Europe and Switzerland opportunities for diversification, growth potential, and accessibility to the digital asset market.

Investors considering digital asset-focused structured products should carefully assess their risk tolerance, perform due diligence, and consult with a financial professional to ensure that these products align with their overall investment objectives and risk profile.

By understanding the risks and opportunities associated with digital asset investments, investors can make more informed decisions and potentially benefit from the growth of the digital asset market while minimizing potential risks.