VanEck launches new ETN to invest in a basket of 6 cryptocurrencies

If 2021 saw Bitcoin (BTC) and many altcoins enter the traditional exchanges, it looks like 2022 is set to continue the trend. Indeed, the company VanEck has unveiled a new investment product, Exchange Traded Note (ETN), which replicates the performance of 6 famous cryptocurrencies.


VanEck launches new ETN to invest in a basket of 6 cryptocurrencies

An ETN from VanEck to track BTC... but not only

Launched on 14 January, the VT0P Exchange Traded Note (ETN) now allows you to replicate the performance of the following cryptocurrencies on the traditional stock market:


·         Bitcoin (BTC) ;

·         Ether (ETH) ;

·         Cardano (ADA) ;

·         Solana (SOL);

·         Polkadot (DOT);

·         Litecoin (LTC).

This product is tradable on two exchanges, namely XETRA (Frankfurt - Germany) and SIX Swiss Exchange (Zurich - Switzerland).

Although VanEck does not own the assets directly when you buy their ETN, it replicates the performance of the fully collateralised MVIS Cryptocompare Crypto Leaders Index (MVLEADV). The crypto-assets in question are, according to VanEck, stored in a cold wallet at a regulated and insured trustee.

The different lines of this ETN do not represent an equal percentage. For example, BTC and ETH together account for 65%, while DOT accounts for only 7%. You can find the exact composition of the index and other technical details on the company's website.

It should also be noted that the investor will be charged the equivalent of 1.5% annual fee on the size of his position, as well as 0.25% entry fee and 0.25% exit fee.

VT0P is not the only financial product from VanEck with cryptocurrencies as an underlying. In fact, the company offers 7 other ETNs built in the same way, each replicating the individual performance of the following assets:

·         VBTC → Bitcoin (BTC) ;

·         VETH → Ether (ETH);

·         VDOT → Polkadot (DOT);

·         VSOL → Solana (SOL);

·         VTRX → Tron (TRX);

·         VAVA → Alavanche (AVAX);

·         VPOL → Polygon (MATIC).



What is an ETN?

The term ETN, or Exchange Traded Note, could be roughly translated as "Exchange Traded Note", it differs from ETF (Exchange Traded Fund).

In terms of user experience, it will be broadly the same for the investor depending on whether they choose an ETF or an ETN. The difference lies behind the scenes in the construction of these two financial vehicles which basically have similar objectives: to replicate an underlying asset (indices, commodities, baskets of assets, etc.). 

An ETN is in fact to be considered as an IOU, its functioning has similarities with the bond. The provider issues a defined quantity of ETNs (which may vary over time), so they are often less liquid than ETFs, although they trade like ETFs.

In an ETF, on the other hand, there is no finite quantity. When an investor buys one of these products, the company buys the asset or a synthetic version that replicates the performance of the underlying. In this respect, they are considered less risky than ETNs because they are easier to trade.

ETFs or ETNs, whatever the case, their arrival is good news for the cryptocurrency ecosystem that is slowly but surely being implemented in traditional finance. And 2022 should hopefully bring more similar announcements, a sign of growing democratization.

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