Innovative Bitcoin products are not falling short of delivering this year, with institutional firms notching up one crypto product or other.
While none are as bold as FTX’s Shit-perp futures, one Switzerland bank is providing investors a way to earn a handsome yield on Bitcoin prices — if they can stomach some losses along the way, that is.
Bitcoin yields as investor bait
Zug’s SEBA bank, a crypto-focused and Swiss license financial institution, announced a new Bitcoin-centric structured product yesterday. The instrument allows holders to passively bet on BTC prices in the short-term.
🚀Presenting an innovative way to benefit from Bitcoin volatility. Looking for an easy entry into the crypto market with an attractive payout? Start today with the Dual Currency Certificate! *The yield will be determined on the Initial Valuation Date/End of Subscription Date
Termed the Dual Currency Certificate (DCC) in its prospectus, the product is linked to real-time BTC/USD exchange exchanges and is issued at a discount to spot BTC prices.
Described as a “yield enhancement” product, the DCC bets on short-term Bitcoin movements, paying out investors when a predetermined “strike” period is met. Profit redemptions, if any, are determined by calculating the “final price” of the underlying asset with respect to their strike price.
SEBA is forthcoming with regard to losses. The bank states investor capital is not protected in the DCC product, meaning it’s not a strategy to set-and-forget. Instead, investors “should be prepared to sustain a potential loss of their initial capital,” the prospectus cautions. There are other risks too, including theft, fraud, and cyber-attack on the exchanges that SEBA uses. All investor positions will be terminated and redeemed in such an event.
Limited to 50 investors
For those who dare, the maximum yearly payable yield is capped at 44 percent. The product is pegged at a 1:1 (BTC to USD), and a total of $10 million such shares are issued. And as with all institutional products, there are some fees too — SEBA charges 0.6 percent per annum as collateral.
The product goes into play in the first week of July, with an August maturity for the first batch of issued DCCs. It’s closed to investors from the U.S and U.K and can be publicly distributed only in Switzerland. Those interested might want to get their hands on the DCC soon; only 50 investors are allowed under the scheme.
The product follows similar other ventures offered by firms diving into the crypto market to increase their product suite. Earlier this month, BTSE Exchange launched its Bitcoin-settle gold futures products, allowing investors to bet on the yellow metal using BTC as collateral.
I’m particularly proud of this because we are the first digital asset exchange to launch #bitcoin-priced gold futures.