German Financial Group to Launch Crypto Index Funds for Institutional and Retail Investors

Iconiq Funds, the asset management arm of Germany-based Iconiq Holding — the team behind the ICO and token sale accelerator program Iconiq Lab — is launching a series of digital asset index funds beginning in Q4 2018, the company announced on Aug. 17, 2018. Investment into crypto assets will become available through traditional and regulated financial vehicles, such as exchange-traded funds (ETFs) and exchange-traded notes (ETNs).

The first digital asset index fund is planned to be launched under Maltese jurisdiction as a Professional Investor Fund (PIF). It is currently under review by Malta Financial Services Authority (MFSA).

The company claims the “diversified exposure to the digital assets market” as a key selling point for this new series of instruments. An investment fund essentially hides the intricacies of crypto assets from its participant, offering participation in a selected group of tokens. An investor expects that, even if some tokens of the group won’t perform well, the growth of others will compensate for it.

Iconiq Funds says the company will offer its financial products under the supervision of a governmental watchdog — such as MFSA for Malta. The team explains that, for many conservative investors, the lack of regulatory oversight was a key reason to avoid exposure to crypto assets.  

Maximilian Lautenschläger, Iconiq Holding’s managing partner, believes that such investment vehicles could help bring new capital to the crypto industry from the traditional financial markets. “Iconiq’s aim is to make ICOs and crypto investments accessible to institutional investors, family offices and retail investors. Only through such regulated vehicles can we open the doors for the trillions of capital from institutional markets to enter crypto.” Lautenschläger said, according to the announcement.

Later, Iconiq Funds also plans to offer other financial products suited for traditional investors’ demands, such as crypto index exchange-traded funds (ETFs) and notes (ETNs) in 2019.

Digital asset management token

The company says that Iconiq Funds is not merely a traditional asset management firm that started trading in crypto. It is, rather, a part of a larger, community-driven ecosystem that Iconiq Holding has built around its own token, ICNQ — initially released by Iconiq Lab. The ICNQ token functions as a “decentralized VC club membership instrument.” According to Iconiq Funds, its holders receive access to presales of companies graduating Iconiq Lab’s token sale accelerator program. It can also be used as a voucher instrument for payments within the asset management ecosystem created by Iconiq.

“We have successfully positioned the ICNQ token as the token for digital asset management,” said Iconiq Holdings CEO Patrick Lowry. “ICNQ tokens can now be redeemed in our ecosystem for products and services provided by Iconiq Holding companies, including by our digital asset index funds to pay asset management fees to the fund manager, Iconiq Funds. We are excited to add this new value-driver to the ICNQ economy, with many more to come for the benefit of our community.”

According to the internal memo Cointelegraph had access to, Iconiq Holding will be selling up to 10 million remaining ICNQ tokens, with a public token sale taking place on the Gibraltar Blockchain Exchange Grid in October 2018. The ICNQ token will then be traded on Gibraltar Blockchain Exchange after the sale, with more exchanges to come.

Iconiq says it plans to capitalize on opening the crypto marketplace to a completely different, and much more powerful class of investors, which may bring “a tectonic change” to the crypto market. Also, it hopes the ICNQ token itself will have the potential to become a kind of derivative instrument that would reflect the influx of the virtually unlimited capital from the outside world of traditional finance into the much smaller crypto ecosystem.