Institutions Are Showing Interest in ETP Tied to Binance Coin, Amun Says

Swiss crypto investment product provider Amun says it has received significant institutional interest in its exchange-traded product (ETP) tied to the Binance Coin (BNB) exchange token. 

Amun’s Managing Director and Head of ETFs, Laurent Kssis, said the company’s European roadshow in London, Zurich, Milan and Scandinavia is already “fully booked” with meetings with representatives from over 30 institutional investors across the continent. 

The event, which began last week and is expected to continue through Friday, is marketing the BNB ETP to potential clients. These are primarily “qualified investors who may have a mandate to allow exposure to crypto as part of a much broader portfolio of assets,” said Kssis. 

Meetings have been with hedge funds and family offices, with some also scheduled with asset managers. One-to-one sessions were oversubscribed, so Amun has added more events, including a lunch meeting, for investors to participate in.  

Obviously, taking a meeting isn’t the same as making a purchase. But institutional interest may signal that such big-money investors are starting to broaden their crypto horizons beyond bitcoin. 

The ETP is listed on Swiss stock exchange SIX and was created in conjunction with Binance and launched in October. Each tradeable unit tracks just over 1 BNB, providing institutional investors with exposure to the exchange’s ecosystem through a regulated, conventional product.

Amun launched its first crypto ETP in October 2018, tracking a basket of the five largest cryptocurrencies by market cap. According to Kssis, institutional interest in the BNB ETP has broadly been in line with those of other Amun products that launched this year.

The measures Binance takes periodically to reduce the supply of BNB are part of what makes it attractive to institutions, said Lanre Jonathan Ige, a researcher at Amun. 

“Historically one of BNB’s value propositions has been the token burn, where Binance would burn a given amount of BNB equal to 20% of their quarterly profits,” he said.

BNB holders also get discounts and special privileges, such as participation in token sales on Binance’s Launchpad platform. Debuting in 2017, the token surged in price this year to an all-time high of $38, though it’s since slid down into the mid-teens. 

New BNB-integrated products and services, such as margin trading, lending, and derivatives, could become another key value proposition should they gain and hold market share, said Ige.

In an investment thesis published at the ETP’s launch, Amun argued Binance Coin was “in a prime position to be one of the best performing large cap crypto assets of the next twelve months.”

Supporting the idea that well-heeled investors are starting to sniff around cryptos other than bitcoin, Grayscale Investments’s Q3 report showed that inflows into its non-bitcoin trusts increased sharply, with nearly 80 percent coming from institutions. Out of the total $104.4 million invested into non-Bitcoin products, $83.1 million had been in the last quarter. 

But some are not convinced institutional investors favor so-called altcoins. Mati Greenspan, founder of research firm Quantum Economics, said there is little appetite for additional investment into any cryptocurrencies.

“What seems most likely to me, and of course will be very difficult to prove, is that some of the miners who had been stashing bitcoin during the bull run are releasing additional supply on the market,” he wrote in an email brief Monday.

This added selling pressure on bitcoin, which Greenspan believes caused the 10 percent fall over the weekend, will likely prevent traders from moving into other digital assets, at the risk of taking a loss from liquidating their BTC. The lack of short selling this week suggests many traders are unwilling to speculate about future prices and will hold BTC unless something fundamental changes, he told CoinDesk.

Historically, developments have increased interest in BNB. David Thomas, director at the London-based crypto brokerage firm GlobalBlock, said clients had enquired about purchasing BNB following the launch of the Binance.US platform back in September.

But that can cut both ways. Last month, crypto news outlet The Block reported that authorities in China had paid a visit to Binance’s Shanghai office amid a broader clampdown on the crypto sector by the government. While the initial characterization of the event as a “police raid” appears to have been overblown, and Binance itself insisted it never had an office there, the report alone may have been enough to discourage investment.

The added selling pressure from miners flooding the market with bitcoin may mean some institutional investors sit on their hands until conditions improve.

Again, there’s a difference between expressing interest in an asset and actually investing in it. Amun hopes its meetings with potential clients will convert into orders.