Managing & Integrating Data

The investor quest for transparent digital asset data

Kristen Mierzwa

Director, Head of Digital Assets, FTSE Russell, a London Stock Exchange Company

Despite recent turmoil, the digital asset market remains very attractive to institutional investors and wealth managers. However, investors need trustworthy data, accurate price discovery, transparency and consistency in the digital asset market. For more information on how Refinitiv can help, head over to our FTSE DAR Pricing Data webpage.

  1. Institutional investors and asset managers say that overall returns on the crypto and digital assets in the funds they manage are positive, according to the 2022 Institutional Investor Digital Assets Outlook Survey by Nickel Digital Asset Management.
  2. To support the continued development of the digital asset market through greater governance and transparency, FTSE Russell has partnered with Digital Asset Research to deliver reference price files for digital assets via Refinitiv DataScope Select.
  3. Currently, there are 449 Digital Assets ― 50 Benchmark assets and 399 non-Benchmark assets ―included in the FTSE DAR Reference Price files, listed across 10 participating and 18 Watchlist digital asset exchanges (as of 20 January 2023).

Institutional investor interest in digital assets is going from strength-to-strength, even though the cryptocurrency market is currently experiencing challenging times. In fact, according to a recent survey, 91 percent of the 200 institutional investors and wealth managers questioned believe the market sell-off is a positive for the sector’s long-term future.

Many asset owners and asset managers see the digital asset market as an interesting way to diversify their portfolio and invest in technologies that are changing the way the internet works, according to Doug Schwenk, chairman of Digital Asset Research. Over time, many institutional investors also believe that digital assets will “go mainstream”, with support for tokenised traditional assets and ensuing market efficiencies.

91% of institutional investors agree valuations of assets such as Bitcoin and Ethereum are very attractive for investors taking a five-year view.

It’s in response to this growing interest that FTSE Russell has partnered with Digital Asset Research to provide transparent reference pricing data to support digital asset investing activities.

The data – delivered by Refinitiv – includes price discovery and market data classification systems – like the SEDOL identification codes and the Digital Asset Research taxonomy – to help integrate digital assets as part of a larger portfolio. The FTSE DAR Reference Price is available via DataScope Select.

Meeting today’s and tomorrow’s challenges

Within the digital assets sector, 2022 was a tough time. Tokens such as Bitcoin and Ethereum have lost about 70 percent of their value since their all-time high in late 2021.

Trading volumes and monthly transacting users at Coinbase dropped by 27 percent and 6 percent, respectively, from the second to the third quarter. And of course, in November 2022 the FTX collapse shook the market. But FTX was not part of the participating exchange universe and did not contribute to the Benchmark Asset prices in the FTSE Global Digital Asset Index Series.

Tokens such as Bitcoin and Ethereum have lost about 70% of their value since their all-time high last year.

However, more than half (55 percent) of those questioned in the Nickel study say they have had exposure to the crypto and digital assets market to some extent for more than three years and their longer-term experience has been generally positive.

Nearly three out of four (72 percent) say that overall returns on the crypto and digital assets in the funds they manage are positive, with 24 percent saying returns are very positive.

Experts in these markets say they believe in the growth potential of this rapidly evolving asset class, and FTSE and Refinitiv — both LSEG businesses – are working to provide the data that firms need to identify opportunities and to invest in this emerging asset class.

In response to growing interest in institutional quality data and indices, FTSE Russell started exploring index development with Digital Asset Research in 2018, learning from the launch of an indicative index series.

In 2020, FTSE Russell and DAR forged ahead with their product partnership, adding select digital assets to the SEDOL Masterfile and creating the pricing data source including DAR’s taxonomy.

They believe that high-quality data and benchmarks can help address current institutional investor and wealth management challenges in the sector. These include limited governance, inconsistent market practices and unreliable pricing data from a variety of sources.

72% of institutional investors say that overall returns on the crypto and digital assets in the funds they manage are positive.

Delivering transparent data

The data solution establishes a robust hourly reference price for digital asset market performance.

he Hourly Reference Price files combine Digital Asset Research’s rigorous digital asset exchange and asset-vetting process with the robust index methodology and governance framework of FTSE Russell.

Currently, there are 449 Digital Assets – 50 Benchmark Assets and 399 Non-Benchmark Assets – included in the FTSE DAR Reference Price files, listed across 10 participating and 18 Watchlist digital asset exchanges1. representing approximately $536.2bn in market capitalisation, over 90 percent of total digital asset market capitalisation2.

Institutional investors and wealth managers can choose between:

  • The FTSE DAR Reference Price for Benchmark Assets – Provides market participants with prices for digital assets that qualify for use as “benchmarks” under the UK and EU Benchmarks Regulation. The 50 digital assets currently include Bitcoin and Ethereum.
  • The FTSE DAR Reference Price for Non-Benchmark Assets – Delivers prices for 449 digital assets that do not qualify for use as “benchmarks”, which fall into two categories. Tier One Non-Benchmark Assets that do not meet benchmark requirements but are priced only from Vetted exchanges. Tier Two did not pass asset vetting and is priced from both Vetted and Watchlist exchanges.

To learn more about how high-quality digital asset reference pricing data can support your firm’s investment strategy in this sector, visit the Refinitiv FTSE DAR Pricing Data page.

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