Exclusive: FTSE plots development of digital asset index in crypto push
The company behind the FTSE 100 is set to develop a crypto index which it says will “sit alongside” the benchmark equities.
The benchmark index which came into being in the 1980s is the primary reference point for the performance of the UK stock market. The addition of over 40 digital assets to a new FTSE index signals that crypto’s meteoric rise has become impossible for key financial institutions to ignore.
“The end goal is to have EU and UK compliant indices which sit right alongside the FTSE 100 and the Russell 2000,” said Kristen Mierzwa, the head of ETF strategy and business development for the FTSE Russell, a London Stock Exchange subsidiary which produces global market indices.
In a sign of the times, Mierzwa is planning a major expansion of the digital asset index series, launched in October, which currently provides data on just three of the best known crypto projects – Bitcoin, Ethereum and Cardano.
“We have come a long way.”
Kristen Mierzwa said in comments to City PM
“Right now we’ve got 43 assets which have made their way through the vetting process,” she added, confirming that dozens more projects will be added to the FTSE’s digital asset index in 2022.
With more institutions diving into the crypto space the need for reliable and definitive pricing has become pressing.
“This was clearly becoming a market that people wanted data around,” Mierzwa said, discussing the rationale for the new project.
FTSE Russell estimates crypto will have a global market cap greater than $3 trillion by 2025, putting the asset class on a par with private equity.
However, not everyone in the UK’s regulatory community is sold on the market opportunities offered by crypto. In October, the Bank of England called for the urgent regulation of digital assets, warning that the size of the market makes it a risk to global economic stability.
Last month the Advertising Standards Authority raised alarm bells over digital assets being pushed to investors in ads, which lacked appropriate warnings. The City watchdog, the FCA, made similar warnings about celebrities such as Kim Kardashian flogging crypto products.
While Mierzwa said coins added to the FTSE’s digital asset index will undergo a rigorous vetting process which aims to screen out the overwhelming majority of some 11,000 known digital assets, she confirmed stablecoins and even meme coins could be added to the index.
Blended products, which reduce risk by pairing crypto with less volatile assets such as gold, will also be offered.
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