New Report: Five Things Worth Knowing About Structured Products on Digital Assets

This newsletter is part of The Assetizer, GenTwo's thought leadership platform.

Hello everyone, 

Today we released our full-length report on our Structured Products on Digital Assets Summit and its findings. If you missed the webinars or want to check back on some of the talks, all of the material we covered is available now – for free, to read online or download as a PDF. 

Here is the link: Structured Products on Digital Assets: The Expert View  

I will otherwise keep it brief this week, but I do want to share the five conclusions we came to after the Summit about the current state of what we see as a nascent but increasingly important market. They weren't part of the webinars, so this is the first time we're sharing them. See below for a summary.  

What We Learned 

1. The gap is in supply and transmission. Investors can buy Bitcoin through spot markets and ETFs, but the capital-protected notes, reverse convertibles and autocalls they use in every other asset class are hard to find. Where client demand does exist, it often stalls with the advisors and distributors who would have to recommend the product. 

2. Volatility is raw material. Crypto's swings are usually cast as its big institutional flaw. For a structured product, they're the input. Options let an investor keep part of the risk and swap the rest for a coupon or a floor. 

3. A wrapper is not a market. An ETF, a note or a token makes an asset easier to reach. You still need an issuer, a custodian, a paying agent and a route into the investor's existing settlement. Tokenization can make that plumbing cheaper. It doesn't remove it. 

4. Risk transfer is the bottleneck. Issuers don't want to hold the derivative risk inside these products, so everything depends on someone willing to take the other side. Crypto options markets have come a long way, but they're still thinner than equities or FX. 

5. Familiarity is the route to adoption. The most credible path into portfolios runs through structures investors already know. Our closing case study was a Bitcoin dual-currency note with an ISIN that clears like any other security. The investor never touches a wallet. 

Once again, here’s the report: Structured Products on Digital Assets: The Expert View   

Tom Lyons, GenTwo