S&P Index Funds Launched as Crypto Tokens

For the first time ever, tokens pegged to S&P index funds can be traded in the U.S.

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Key Takeaways

  • Digital assets firm Securitize has partnered with S&P Dow Jones Indices to tokenize two of its index funds.
  • Tokens will track the value of the S&P Cryptocurrency Large Cap Ex-MegaCap Index and the S&P Kensho New Economies Composite Index. 
  • Securitize used Algorand, a Proof-of-Stake blockchain, as the underlying chain for tokenizing the funds.

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Digital assets company Securitize has unveiled two tokenized funds in partnership with S&P Dow Jones Indices, the world’s leading index provider.

Securitize Launches Tokenized Index Funds

Two tokenized funds that will track S&P indices have been launched. 

In a blog post, Securitize, a digital asset securities company, announced partnering with S&P Dow Jones Indices to tokenize two of its investment indices: the Cryptocurrency Large Cap Ex-MegaCap Index, and the Kensho New Economies Composite Index

While the S&P Cryptocurrency Large Cap tracks 30 different cryptocurrencies, the S&P Kensho New Economies fund allows investors to gain exposure to emerging technology sectors such as artificial intelligence, virtual reality, fintech, and nanotechnology. 

The newly-launched products will be provided through Securitize’s digital asset management arm, Securitize Capital, and offered to accredited investors only. In a Wednesday press release, Securitize said it used Algorand, a Proof-of-Stake blockchain, as the underlying network for tokenizing the funds. When asked why the team chose to launch on Algorand, Jamie Finn, co-founder and president of Securitize, told Crypto Briefing:

“We have a great relationship with Algorand and issued the largest-ever Reg A+ capital raise on their chain, so when we decided to launch these exclusive funds tracking two of S&P’s most innovative indices, Algorand was the natural choice due to its speed and cost efficiency.”

This is is the first time fully-regulated investment products tracking S&P index funds are being offered as tokens. In the crypto space, tokenized indices already exist but operate outside regulatory oversight.  

Scott Harrigan, CEO of Securitize believes the latest launch that may lead to a wave of tokenized funds in the future and further boost institutional blockchain adoption. Discussing the launch of the tokenized funds, Harrigan said:

“S&P DJI’s innovation and leadership in tokenizing its indices is a major sign that institutions understand the many advantages of tokenization—from efficiency to easier investor access and, I anticipate will be the start of a wave of tokenized funds over the coming months.” 

Before the product launch, Securitize teamed with Anchorage Digital, a crypto services firm that will give custody services. Furthermore, Copper Technologies and Interactive Brokers will be the other partners that will manage the funds’ assets.

Disclosure: At the time of writing, the author of this piece owned ETH and other cryptocurrencies.

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