SIX issued updated regulations for the issuance of cryptocurrency-based ETPs (February 2024)

The SIX Swiss Exchange issued on 15 February 2024 new / amended regulations for the listing of cryptocurrency-based ETPs.

In a nutshell & assessment:

👉 Broader universe - Universe of underlyings grow from 15 to 50+ cryptos. Underlyings newly include coins and tokens (continue to exclude privacy coins, stablecoins and asset or hybrid tokens).

👉 Tailored to current markets - Qualifying criteria reflect the development of the cryptomarkets, and include, cumulatively, USD 500m market capitalisation , USD 50m average daily liquidity over last 30 days, at least 180 days of trading history, as referenced by any of the following market data provider: coingecko, cryptocompare, coinmarketcap . Additionally, it must be ensured that the crypto has a trading pair against USD or EUR, and is traded on a venue that transparently disclosed prices, provides an API and which web site is in English.

👉 Stronger governance – Issuers or guarantors must be either a licensed bank, insurance or securities firm, foreign institution subject to equivalent prudential supervision, or, alternatively, the custodian of collateral assets must be subject to prudential regulation (either a licensed bank, including fintech licensed institution, or a foreign institution subject to equivalent prudential supervision).

👉 Proper incentives – The new / amended regulation encourages offerors of custodial services and unregulated cryptoexchanges to seek adequate regulation / supervision. I argued already in March 2022 (https://lnkd.in/e6nuzizx) that unregulated digital exchanges were a bottleneck, and that digital exchanges regulated and supervised in the same way that traditional stock exchanges are today, would generate the necessary trust for market participants to adopt digital assets. In the short term, current regulated offerors of custodial services and regulated crypto exchange gain a (opportune and timely, I dare to say) market advantage.

👉 Entry into force - 1 April 2024. Previously listed ETPs remain listed, but must upgrade the prospectus within 6 months.