Barrier Reverse Convertible on BTC

Note: GenTwo is a platform provider for structured products. This information is intended for professional investors only.

What is this product?

A Barrier Reverse Convertible certificate that offers professional investors a fixed coupon linked to Bitcoin: the coupon is paid regardless of how the BTC/USD rate performs, and investors receive their full denomination back at maturity as long as Bitcoin has not fallen below a set barrier. It is a cash-settled, short-dated instrument aimed at investors seeking income from Bitcoin exposure rather than open-ended participation in its price.

How does it work?

Investors receive a fixed coupon on the denomination in every case, paid at maturity regardless of how Bitcoin performs. The repayment of capital then depends on the BTC/USD rate at a single valuation at maturity: if Bitcoin is at or above a barrier set below its starting level, investors are repaid the full denomination; if it is below the barrier, the repayment reflects Bitcoin’s performance measured from its initial level, reducing capital in line with the decline. The barrier is observed only once, at maturity — a European barrier — and the product settles in cash.

What is the underlying asset?

The underlying is the price of Bitcoin measured against the US dollar. Bitcoin is the first and largest cryptocurrency — a decentralized digital asset that runs on a public blockchain with no central issuer or administrator, and whose total supply is capped by its protocol. For this certificate the relevant price is not drawn from a single exchange but from a defined reference rate, the Deribit 8am UTC fix, which the calculation agent uses to set both the starting and final levels.

Bitcoin trades around the clock and is known for pronounced price volatility, which is the characteristic that structured products on it are built around. Accessing that exposure through a securitized certificate also spares investors the operational demands of holding Bitcoin directly, such as custody and the safekeeping of private keys.

Who is behind it?

The certificate is issued by SHA256 Issuer SPC, a Cayman Islands segregated portfolio company that issues the product through a dedicated segregated portfolio, with ISP Securities AG in Switzerland acting as paying agent. STS Digital Ltd, based in Bermuda, serves as both the hedge provider — supplying the economic exposure to Bitcoin that backs the certificate — and the storage provider responsible for safekeeping the underlying digital assets. GenTwo AG provides the securitization infrastructure.

What kind of instrument is this?

A Barrier Reverse Convertible is a structured product that pays a fixed coupon regardless of how the underlying performs, while the repayment of capital depends on the underlying remaining at or above a predefined barrier level. Investors receive the full denomination at maturity if the barrier is not breached; if it is breached, repayment is reduced in line with the underlying’s decline, and in all cases investors hold a claim against the issuer rather than owning the underlying directly.