KRYPTOIN ETHEREUM ETF TRUST
What is Kryptoin’s new product?
Recently, Kryptoin filled a prospectus with the Securities and Exchange Commission, the U.S financial regulator. This prospectus outlined the introduction of Kryptoin’s new product, Ethereum ETF trust.
The Kryptoin Ethereum Trust is an exchange-traded fund which will be listed on the Cboe BZX exchange. The Cboe BZX exchange is currently one of the largest U.S equity market operators. The aim of the Ethereum Trust is to provide investors access to Ethereum at its market price, less the expenses of the trust’s maintenance. In accordance with this objective, the Trust will hold Ethereum in its portfolio and monitor its value in order to provide full transparency to its customers.
The customers can be sure about the security of their investments since all the Ethereum holdings of the trust will be under the custody of Gemini, founded by the Winklevoss twins.
The prospectus explicitly states that the trust will not purchase or sell Ethereum directly, Instead, it will exchange Ethereum when it sells or redeems its shares. The redemption will involve an exchange of a block of 100,000 shares.
Is Kryptoin a safe company?
Kryptoin is a Delaware based firm established in 2016. Since its inception, it has believed in the future of blockchain networks, Bitcoin in particular.
With their experienced asset management team and technical developers, they sponsor a unique perspective on this new and emerging asset class. The firm is also the parent of the Kryptoin Bitcoin ETF Trust.
Kryptoin intends to find new and exciting ways to access cryptocurrencies by building products such as trusts and exchange-traded funds.
Is the product available currently?
The Kryptoin Ethereum ETF Trust is not publicly traded as of now. The Company has just filed a prospectus or an application with the Securities and Exchange Commission currently. The authorization of this fund and public listing may take a couple of months.
The SEC has a history of delaying decisions regarding cryptocurrency products. It can delay the approval of cryptocurrency products for up to 45 days. The SEC has delayed decisions on the Vaneck Mutual Fund and Kryptoin’s Bitcoin ETF trust in the past on the pretext of “public interest.”
Thus, it is believed that the SEC will do the same for this application as well. By then, Ethereum’s value may have risen exponentially, due to which investors will lose out on opportunity profits.
Are there risks involved?
Like any other investment, the Ethereum ETF Trust also carries certain risks. The firm is aware that since Ethereum is a relatively new concept, buying, holding and selling it is different from buying, selling or holding other financial instruments such as stocks, bonds and derivatives.
The company has laid down these risks involved which an investor must consider:
- Digital assets such as Ethereum are relatively newer and its future value depends on the development of Blockchain technology. This parameter is difficult to forecast which induces risks.
- The value of the shares of the Ethereum ETF are directly linked to the value of Ethereum. Thus, the shares are subject to massive volatility due to the nature of cryptocurrencies.
- Ethereum transactions are irreversible and stolen Ethereum cannot be easily recovered. Such incidents may affect the shares of the ETF.
- A breach of security in the trust’s custodian Gemini could lead to a loss of assets and impact the share price.
- The unregulated nature of cryptocurrencies may be an obstacle in its growth in the long-term.
- Competition from other digital assets such as Ripple or Cardano may negatively impact the value of Ethereum and subsequently the value of its shares.
- The Kryptoin trust is subject to high risks due to its exposure to only a single asset: Ethereum. Its lack of diversity may pose a threat to its shares.
How will the value of the shares be determined?
A variety of factors will determine the value of Kryptoin’s shares on the stock exchange. These are few factors involved:
- An increase in the global supply of Ethereum will dilute the value of investments.
- The mass adoption of Ethereum as a medium of exchange and store of value will also determine the value of the shares.
- Future government policies and tax slabs on Ethereum will have a direct impact on its value and subsequently in the value of shares.
- Increased competition from developing networks such as Bitcoin, Cardano and Ripple may reduce the share price of the trust.
- Global economic conditions such as recessions or booms may decrease or increase the value of the shares in proportion with the value of Ethereum.