Kleinwort Hambros, a London, UK based private bank has launched a new blockchain investment fund. Kleinwort Hambros is owned by Societe Generale, the multinational investment bank, and the new product is an exchange-traded note (ETN).
Kleinwort Hambros made this announcement recently. Their ETN will be based out of Luxembourg, and the investment will be in businesses working with the blockchain technology.
Blockchain is increasingly seen as a technology with a wide range of possibilities. Investment in this technology is picking up. Venture Capital (VC) funds have invested $4 billion in blockchain start-ups in 2018, as a Statista report indicates.
IDC expects that the global investment in blockchain will reach $12.4 billion in 2022, with a CAGR of 76% between the 2018-2022 period. That’s good news, however, investment in blockchain isn’t that streamlined.
Blockchain start-ups and companies trying to innovate using blockchain face several challenges in raising funds, e.g.:
- Investor sentiment depends heavily on market performance.
- Investors primarily focus on blockchain projects involving new blockchain protocols, which isn’t a wide enough horizon.
- Many investors are looking at the short term only, whereas the technology needs sustained investment.
- Investors must be accredited in their geography.
- Start-ups must show completion of key phases before they can land investment deals.
Simplification of this investment climate is imperative for blockchain start-ups and companies working with this technology. This will help them to receive adequate funding. This is where the ETN from
Kleinwort Hambros assumes importance.
An exchange-traded blockchain investment fund
ETNs are structured investment products, which are issued as senior debt notes. Unlike ETFs, which represent a stake in an underlying asset, ETNs are like unsecured bonds.
Kleinwort Hambros says that their ETN will invest in 20 stocks of companies that develop apps using blockchain or use it. They will identify companies with a high chance of making profit from their development and use of Blockchain.
The bank will make their new ETN available to their existing and new clients, and the minimum investment requirement is GBP 1,000 ($1,305 at the time writing). They have analyzed the market and see significant demand for ETNs focusing on blockchain.
Expanding the horizon of investing in blockchain
It’s indeed significant to see that a large investment bank like Societe Generale is focusing on simplifying investment in blockchain. Coming at a time when the blockchain-crypto communities are eagerly waiting for the first Bitcoin ETF to emerge, the new ETN assumes even more importance.