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Swiss based ETF specialist Helveteq has signed a new distribution deal for the Swiss market with Zurich-based OpenFunds as it continues to build market scale for its product set of ESG-transparent ETPs. Helveteq manages ETPs based on cryptocurrencies. It was the first issuer of carbon-neutral cryptocurrency products on the Swiss stock exchange last year.
Helveteq offers exchange traded products – aka ETPs – for self-directed investors, as well as non-Exchange Traded Products (nETPs) for external managers.
For digital assets on the blockchain, greenhouse gas emissions cannot be prevented and represent a key environmental challenge for the cryptocurrency sector. Helveteq measures ecological footprint in terms of CO2 equivalent and compensates for it through direct financial contributions to projects that capture, reduce or avoid GHG (greenhouse gas) emissions or benefit local communities that are addressing social change.
Helveteq uses the carbon credits generated by these projects to decarbonise by compensating voluntarily for the emissions. The compensation is critical in terms of helping to bring more momentum to the battle against climate change.
Helveteq CEO Christian Katz thinks the environmental impact of cryptocurrency mining and the wider blockchain has been an issue overlooked by many crypto investors to date, but as bigger hitters like pension funds get involved as investors in the industry, they are going to be looking for investment products that address this problem. That said, it is also increasingly a concern for smaller investors as well.
Long term ESG partnerships
Helveteq has a number of longer term partnerships which fit into its ESG vision. It has a long term cooperation agreement with the Swiss Fin Tech Innovation Lab at the Institute for Banking and Finance at the University of Zurich. This has led to the development of a novel model of how to calculate and compensate for the carbon footprint of assets that are powered by blockchain technology.
The firm has two ETPs currently out to market, BTCO2 and ETH20. Bitcoin Zero ETP (BTCO2) replicates the performance of Bitcoin. It is designed to give investors one of the cleanest, simplest and safest ways to gain exposure to Bitcoin, the largest cryptocurrency by market capitalisation.
The Ether Zero ETP (ETH20) tracks the performance of Ethereum.
The University of Zurich has established what it calls a lifecycle model for the analysis of the carbon footprint of each blockchain used in Helveteq’s range of products. The lifecycle model essential differentiates between the energy and carbon usage of transactions on a blockchain, versus the holding of digital/crypto assets on the blockchain.
Helveteq calculates its number of transactions and its holdings of digital assets versus the total blockchain community on a monthly basis and compensates the carbon impact of the investor-led transactions and holdings based on a novel methodology developed internally by the University of Zurich. In a month in which the fund manager executes a high number of transactions versus the average blockchain user, but the holding value is less significant, the firm will compensate more at the holding carbon impact level.
The purchase of carbon credits is certified under approved global standards. These include the United Nations Clean Development Mechanism and the Verified Carbon Standard. Projects have included clean water in Rwanda, wind power and clean hydropower in Laos.
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