Abra to Launch a Crypto Token Pegged to an Investment Fund

medium.com

Virtual wallet provider Abra will be rolling out a new token in an attempt to give investors further exposure to the crypto market.

Created by Bitwise Asset Management, the Bitwise 10 Crypto Index Token (Bit10) monitors the top 10 digital currencies based on market capitalization. It is also rebalanced on a monthly basis. The press release states that investors can buy the token, which has been created on Bitcoin and invest in the 10 digital currencies all at the same time.

According to the release, this gives retail investors access to “nearly 80 percent of the cryptocurrency market” at once.

Bill Barhydt, the CEO of Abra, states that currently, the fund invests in Bitcoin, Ethereum, XRP, Bitcoin Cash, EOS, Stellar, Litecoin, Dash, Monero, and Zcash.

The Abra CEO adds that users can also deposit, Bitcoin, Litecoin, Bitcoin Cash, or a fiat currency into their Abra wallets and then convert the fund to the Bit10 token.

Barhydt claims that the token itself is not a fund. He also says that the Bit10 token is 100 percent Bitcoin-based.

Through smart contracts, the token is tied to a user’s digital currency or fiat currency holdings to Bit10. After this, Bit10’s price will change according to the said coins’ performance.

According to an Abra representative, even though the token is created on Bitwise’s index fund, it is not an exchange-traded fund (ETF). On the other hand, the token acts like an ETF due to its capacity to provide investors exposure to an index.

Because of this, Bitwise has no plans of offering an ETF that is based on its digital currency index fund. During that time, the firm stated it was seeking the approval of the U.S. Securities and Exchange Commission (SEC).

The spokesperson for Abra claims that since the Bit10 token is not really an ETF, it does not need an approval from the SEC.

In addition, Barhydt clarifies that the Bit10 token utilizes the same synthetic asset model just like all the Abra tokens available in their app. The Abra CEO also says that the tokens are kept in “fully-collateralized” Bitcoin multi-sig wallets while the user holds their own keys, adding that the token is also not a security.