Traditional finance welcomes crypto into its most sacred temple. Starting next year, S&P Dow Jones Indices will launch indices on major cryptocurrencies. In partnership with Lukka, it will provide price data on more than 550 cryptocurrencies, including Bitcoin.
The frontier between traditional finance and the crypto universe is becoming even narrower. A historic player in the sector is preparing its entry into this market. S&P Dow Jones Indices, a division of S&P Global, will provide indices on cryptocurrencies as early as 2021.
S&P Dow Jones Indices is a major player in the financial sector. Its indices include the iconic S&P 500 and Dow Jones Industrial Average. And from next year, indices relating to crypto-actives will also be available.
For these beginnings, S&P partners with Lukka, a software and data provider specializing in crypto assets. In a press release, S&P announces that it will provide customized indexing and benchmarking solutions.
“As the crypto-asset market has evolved in recent years, investor interest in benchmarking and indexing solutions based on crypto and blockchain assets has increased and has reinforced the need for reliable price data,” says S&P DJI.
For Lukka, there is no doubt that these future indices are further proof of a rapprochement between two worlds of finance. “Our collaboration with S&P DJI is another significant step in bridging the gap between the crypto-asset ecosystem and traditional financial services,” says CEO Robert Materazzi.
The creation of these indices could ultimately contribute to the development of trading in cryptocurrencies by institutional investors. Lukka insists on the need for these clients to access “more reliable” data.
The partners also put forward “institutional quality standards, such as AICPA SOC controls”. As the head of CoinShares recently stated, keeping away from cryptocurrencies like Bitcoin is increasingly becoming a mistake for asset managers.
“With digital assets such as cryptocurrencies becoming a rapidly growing asset class, the time has come for independent, reliable and user-friendly benchmarks,” said Peter Roffman, Global Head of Innovation and Strategy, S&P Dow Jones Indices.
According to Reuters, the project of one of the main index providers should help further democratize these investments. The growing participation of institutional investors, notably through Grayscale, is also contributing to the rise of Bitcoin.
Cryptocurrencies stand out in an economic context marked by high inflation. Bitcoin is thus seen as a hedge against inflation, or even a safe haven asset. To support institutional investments, some players are developing specific services, particularly custody services.