Brazil is known for having one of the most robust and efficient banking systems in the world. Its capital market is also an international benchmark in technology, security and regulatory quality.
Now, the country appears as a new benchmark for world markets. This time, as the warehouse of the greater diversity of digital asset ETFs for investments in the universe of cryptocurrencieswhich has attracted more and more investors and revolutionized the global circulation of assets and investments around the world.
ETFs (Exchange Traded Funds) are funds traded in quotas, which reproduce the behavior of a set of assets or an index, such as the Ibovespa, for example. They have attracted many investors due to their simple concept and application.
A positive point of ETFs is the fact that they are traded in a regulated exchange environment, in the case of Brazil, on the B3, even if, in the case of digital currencies, they are an asset class not yet regulated. And this in practice means being within an environment with supervised rules and, consequently, more friendly for investors accustomed to traditional assets or those who want to be exposed to digital assets within this environment.
In the world, to date, only Brazil, Canada and Australia have recently publicly traded digital asset ETFs. In the United States, the SEC does not yet allow listing. The alternative found was products with exposure to Bitcoin derivative contracts traded on the Chicago Futures Exchange.
Australia only authorized the creation of these products in May this year, when the Australian stock exchange began trading three digital asset ETFs. In Brazil, there are 10 ETFs listed while Canada has already surpassed that number, but there is relevant information in the comparison. In Canada, all ETFs basically reproduce the behavior of Bitcoin and Ether, and in Brazil the diversity is much greater: there are more than 35 indirectly accessible digital assets.
The Investo Metaverse ETF (NFTS11), for example, is referenced by MVIS CryptoCompare Media & Entertainment Leaders, allowing exposure to eight gaming-related assets, metaverse, and the newly created ApeCoin.
Another example is the QR Capital DeFi ETF (QDFI11), the fund is based on the Bloomberg Galaxy DeFi index. The acronym DeFi in English refers to the segment of Decentralized Finance, which encompasses a series of applications and protocols that aim to replicate existing financial services through blockchain and without the need for intermediaries. This ETF allows exposure to 11 assets, the main ones being Uniswap, Aave and Maker DAO.
The Hashdex DeFI ETF (DEFI11) also tracks the performance of the DeFi market and is based on the CF DeFi Composite Index: Modified Market Cap Weight. The fund has 12 assets in its composition, the main ones being Ether, Uniswap and Curve.
There is also the ETF Hashdex WEB3.0 (WEB311). The fund is based on the CF Smart Contract Platforms Index and gives investors exposure to the growth of the Smart Contract Platforms ecosystem.
The Smart Contracts They use blockchain technology, which allows agreements to be made without the intermediation of any institution. Your wallet has a total of seven digital assets. Among the best known, Ether, Cardano Y Solarium.
The most recent of all digital asset ETFs is Empiricus Teva Criptomoedas TOP20 (CRPT11), launched in May 2022. The ETF is referenced by the Teva Cryptomoedas Top20 index, which reflects the performance of 20 cryptocurrencies, with the highest concentration in Bitcoin (BTC) Y Ether (ETH). This is the first time a cryptocurrency ETF has used a national index provider, Teva.
For investors interested only in ETFs referenced in major digital currencies such as Bitcoin and Ether, this is also possible through Hashdex BItcoin ETF (BITH11), Hashdex Ethereum ETF (ETHE11), QR Capital Bitcoin ETF (QBTC11) or QR Capital Ethereum ETF (QDFI11).
The number of investors in digital asset ETFs continues to grow. The Brazilian stock exchange closed April 2022 with 243,000 investors in the ten cryptocurrency ETFs, considering that these investors may have investments in more than one of these ETFs in their portfolios, with a total of R$2.6 billion of resources allocated to these assets. The average daily volume traded in 2022 (until the end of April) was R$55.9 million, compared to BRL 57.8 million in 2021.
The most popular cryptocurrency ETF listed in Brazil, the Hashdex Nasdaq Crypto Index, (HASH11) has 152,000 investors. The fund replicates the Nasdaq Crypto Index (NCI), an index that seeks to globally reflect the movement of the cryptocurrency market and is the first in the world to offer exposure to a basket of digital assets, a total of 10 assets, with most of its wallet made up of Bitcoin and Ether.
This figure exceeds the 121,000 investors in BOVA11, the traditional ETF of B3, which follows the Bovespa Index, the main one in the country. And it is close to the 179,000 investors of the IVVB11, an ETF that follows the S&P500 index, which brings together the 500 largest companies listed on the US stock exchange.
Another factor that gets investors excited is the management fee for digital asset ETFs listed on B3. They range from 0.7% to 1.3%, which makes the product very attractive and competitive.
As a result, the market is increasingly sized by the number of investors and users who promote the use of this asset class. The product has also been used by institutions that seek in some way to have exposure to the variation in prices of these assets, although still on an experimental basis.
However, there is still some doubt on the part, mainly institutional investors, about how to access or offer the asset class, which is not yet regulated. The good news is that in Brazil, initiatives to build regulation have accelerated in recent months. This will bring greater comfort to all players, including institutional ones.
Thus, having taken the lead, the trend is for the country to consolidate itself as an important market for this class of assets and develop more and more products related to this ecosystem, maintaining itself as an international benchmark.