SEBAX ETP: diversified cryptocurrency index from SEBA Bank - The Armchair Trader

Swiss-based cryptocurrency custodian SEBA Bank remains very upbeat about the prospects for cryptocurrency markets, despite the recent sell-off provoked by the dramatic demise of FTX. SEBA has just been celebrating another win for its Crypto Asset Select ETP (SEBAX), which won ETP of the Year at the Swiss ETF Awards.
This is the second year running the ETP has won the award. While we cannot call it an ETF for regulatory reasons, the ETP – exchange traded product – functions in a very similar fashion, although in this case it provides exposure to underlying crypto assets rather than equities.
SEBAX follows a dynamic, risk-optimised index which offers investors broad market exposure to crypto assets like Bitcoin and Ethereum. It caters to investors who want to diversify their portfolios with some level of access to cryptocurrency markets, but who don’t want to go to all the hassle of managing their own crypto wallets.
As an ETP, SEBAX trades like a share on a regulated exchange, with SEBA acting as an underlying custodian. If there has been one major lesson learned by many investors from FTX, it is that an independent custodian is essential – using an exchange as your custodian can bring major risks.
“We provide that additional layer of security by acting as custodian,” explains Gregory Mall, Head of Investment Solutions at SEBA Bank. “There is now much more focus on who the custodian is.”
The index used by the SEBAX ETP is maintained by Market Vector Indexes in Germany but was designed by SEBA Bank and is re-balanced on a monthly basis. This is more frequent than the typical ETF, but reflects the extreme volatility in the asset class.
SEBAX also scores well on fees. It represents the cheapest exchange-traded passive crypto instrument of its kind in the market, at 150 basis points. That compares well with other funds in the market – e.g. the BTCH ETF from ETC Group charges 195 bps.
Mall acknowledges that despite net subscriptions AuMs have come down over the past year as one would expect given the bad news around crypto markets. But he argues that SEBAX still represents an excellent avenue for first time buy-and-hold investors into crypto who are nervous about accessing coins directly on a crypto exchange like Binance and would rather have a Swiss-regulated bank looking after their allocation.
“We are already seeing institutional interest,” Mall says. “These are investors who do not want to have to deal with private keys. Trust in the asset class has evaporated, but at the same time there are a lot of people who still want to get exposure to this asset class at these valuation levels. There are not a lot of trusted intermediaries out there right now and there is a lot of demand for independently certified custody solutions.”
SEBA Bank currently offers six tracker certificates listed on major exchanges, with two offering diversified portfolios of coins. The others focus on single coins – e.g. Bitcoin in USD or CHF hedged versions. SEBAX itself is listed on the SIX Swiss Exchange, Euronext (Amsterdam and Paris) and also Deutsche Boerse Xetra.
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This article does not constitute investment advice. Do your own research or consult a professional advisor.
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