Bringing Transparency to an Emerging Asset Class: S&P Cryptocurrency Indices
Sharon Liebowitz, Senior Director, Innovation & Strategy
Leonardo M. Cabrer, Director, Global Research & Design
- S&P Dow Jones Indices has developed a series of cryptocurrency indices to measure this new emerging asset class.
- The S&P Cryptocurrency Indices are designed to have broad coverage since cryptocurrencies are not homogenous, and the level of activity beyond Bitcoin and Ethereum reflects a dynamic and evolving ecosystem.
- The goods and services provided by the projects (applications, protocols, and products created) in the ecosystem may add to the value of individual coins.
- There is no global regulatory body for cryptocurrencies, nor is there consensus among regulators as to a response to these new innovations.
- The S&P Cryptocurrency Indices have historically experienced high annualized returns accompanied by significant volatility and downside risk.
- Indexing aims to bring accessibility and transparency to the digital assets market
Because digital assets are an emerging asset class, it is helpful to discuss what cryptocurrencies (also referred to as “coins” in this document) are, how the asset class has grown, and how they are regulated. As cryptocurrencies are not identical in terms of what they offer, it is also important to understand how they can be used, along with some of the real and perceived challenges related to the asset class. This background helps to provide added context to the need for indexing to bring accessibility and transparency to this new market. The S&P Cryptocurrency Indices aim to meet these challenges. The indices are designed to serve as benchmarks for the performance of a selection of cryptocurrencies that are listed on recognized, open exchanges while meeting liquidity and market capitalization criteria.