„We would certainly be in a position to make an acquisition“
Hashdex is one of the pioneers in the crypto industry. Founded in Brazil in 2018 by Marcelo Sampaio (CEO) and Bruno Caratori, the start-up focussed on index products right from the off, co-founder Bruno Sousa explains in an interview with Börsen-Zeitung.
„From the very beginning, our aim was to set up investment products that allow professional and retail investors to have controlled and low-cost exposure to crypto assets,“ says the Hashdex Head of US and Europe.
Two ETPs on Xetra
Hashdex is little known in this country. However, two crypto ETPs (exchange-traded products) are already available in Germany via Xetra trading: the „Hashdex Nasdaq Crypto Index ETP“ and the „Hashdex Crypto Momentum ETP“. The „Hashdex Crypto Momentum Factor“ tracks a basket of the twelve largest cryptocurrencies by current market capitalisation. These are crypto assets such as Avalanche, Binance Coin, Bitcoin, Cardano, Cosmos, Ethereum, Polkadot, Polygon, Ripple, Solana, Tron and Uniswap. The Nasdaq ETP has a volume of just over 400 million dollars, and its composition is usually adjusted on a quarterly basis.
European regulatory set-up
The Brazilian's access the German/European market comes via a Swiss broker licence, passporting via Sweden, and via the national supervisory authority, in this case BaFin. „In addition to Xetra, our ETP can also be traded via Gettex and Euronext and soon via Nasdaq Nordics,“ says Sousa, who previously worked as an M&A banker after studying law.
„The volume in Europe is currently a little over 400 million euros,“ says Sousa. In Brazil, Hashdex already manages assets totalling almost 850 million dollars. „If you add the master funds (USA, Caymans), then we have a total of 1.4 billion dollars in assets under administration,“ he adds.
Hashdex is also present in the USA. According to Sousa, a spot bitcoin ETF has been tradable there since March. The start-up was quickly authorised, by converting an existing Bitcoin futures fund into an ETF. The industry had to wrestle with the Securities Exchange Commission for a long time to obtain ETF authorisations. In this context, Hashdex CEO Sampaio famously commented that „we work with regulators – we don't sue them.“ Many people in the crypto industry think differently.
Physically collateralised and cleared via Eurex
In the US, Hashdex has applied for the first authorisation for a crypto index ETF based on a „dynamic indexing“ model. Initially, this will primarily include Bitcoin and Ethereum alongside other assets, at least if the SEC approves them as underlying assets. The Solana token SOL reached the 100 billion dollar market capitalisation mark at the beginning of the week.
The fact that there is no Bitcoin ETF in Germany is due to the fact that a fund must always be invested in several assets – which is why there is also no gold ETF. Instead, there are ETPs and ETNs (exchange-traded notes), which track the prices of Bitcoin or a basket of crypto-assets.
In contrast to ETFs, these are debt securities that are segregated as special assets due to the issuer risk. The „Nasdaq Crypto Index ETP“ and the „Momentum ETP“ from Hashdex are physically collateralised by digital assets and are cleared via Eurex Clearing (as central counterparty).
We were never affected by any of the scandals in the crypto industry.
Bruno Sousa
Crypto scandals did not affect Hashdex customers
„We were never affected by any of the scandals in the crypto industry. Our customers have never lost money as a result of Terra Luna, FTX or Genesis,“ emphasises Sousa. The Brazilian is clearly enjoying his development work, and believes that the first seven years are just the beginning of the next bull market.
The macro environment of falling interest rates promises an upswing for risk assets such as crypto. The split in the assets is such that 70% of the funds come from retail investors and 30% from institutional investors. In Brazil, Hashdex is the leader with a market share of 90% and should have a good chance of finding success throughout Latin America.
M&A is an option
According to Sousa, organic growth is a priority for Hashdex. At the same time, the start-up is also ready to seize opportunities, says the former investment banker, who expects „some consolidation“ in the industry. „Legislation such as the Markets in Crypto-Assets (MiCA) Regulation gives us all legal certainty in Europe, but it also increases regulatory costs,“ he points out. This will cause problems for some providers.
One or two M&A targets have already landed on his desk, reveals Sousa, but during the due diligence process the company has refrained from pursuing the transactions further. „As a venture capital-financed company, we would certainly be in a position to make an acquisition,“ he emphasises. In addition to Softbank, Valor Capital and Coinbase Ventures are also invested in Hashdex.
IPO as a long-term goal
Sousa is certain that further opportunities will arise. As a start-up, Hashdex has a longer strategic planning horizon anyway. „The long-term goal for us is an IPO,“ says Sousa. Hashdex sees itself as being on the journey to becoming a really big company. „And until then, we have to reach one milestone after another,“ he says.
