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Cryptocurrency wallet provider Abra has announced a new token in order to widen the access to cryptocurrency investing.
The startup has launched Bitwise 10 Crypto Index Token (BIT10), developed in partnership with San Francisco-based Bitwise Asset Management. BIT10 tracks the top ten cryptocurrencies by market capitalization and is rebalanced on a monthly basis.
“The BIT10 gives retail investors a simple way to benefit from the diversification and rebalancing of index investing. Now, by holding one asset, Abra users can gain exposure to 80% of the crypto market,” Abra said in an online post. “With BIT10, anyone around the world can invest in a crypto index on the Abra app — with a $5 minimum investment, no restrictions on entry or exit timing, and no fees.”
Speaking with CoinDesk, Abra CEO Bill Barhydt said that the fund currently invests in bitcoin, ethereum, XRP, bitcoin cash, EOS, stellar, litecoin, dash, monero, and zcash. However, he clarified that the token itself is not a fund, saying:
"The BIT10 token is 100 percent bitcoin based. It is a single bitcoin collateralized multi-sig wallet. The amount of bitcoin the consumer is holding in the Bit10 token's wallet is automatically adjusted to reflect the USD value of the BIT10 index. Abra is the counterparty to the contract and hedges away counterparty risk on all of its contracts. This is exactly how all of the other synthetic assets in Abra function."
Barhydt explained that users can deposit bitcoin, litecoin, bitcoin cash or a fiat currency into their Abra wallets and convert funds to the BIT10 token.
The token uses smart contracts to peg a user's cryptocurrency or fiat currency holdings to the same amount of BIT10 tokens. In turn, BIT10's price will go up or down with the performance of those coins.
An Abra spokesperson told CoinDesk as the BIT10 token is not an actual exchange-traded fund (ETF), it does not require SEC approval.
"The Abra BIT10 token uses the same synthetic asset model as all of the other Abra tokens available in our app. The tokens are held in fully collateralized bitcoin multi sig wallets with the user holding their own keys. As such the BIT10 token is not a security,” Barhydt said.
