XRP is among a few notable cryptocurrencies snubbed by the recently launched Morgan Creek Digital Asset Index Fund. Despite being a prominent cryptocurrency Ripple’s XRP is no stranger to being overlooked by institutional investment vehicles due to the uncertainty concerning whether it is a security token.
XRP and XLM Not Included in the Fund
XRP and XLM (Stellar Lumens) were completely missing from the list of cryptocurrency tokens that will be managed by the index fund launched on Tuesday (August 28, 2018). Both cryptocurrencies share a lot in common, particularly the fact that they are both premined. Premining refers to a situation where the total token supply of a cryptocurrency is produced at the onset of the blockchain.
If there’s a central party that owns 30% or more of supply, then we withhold those from the index. Because we think that introduces a lot of additional risks that may not be there if it was a more decentralized network.
There continues to be a fair bit of controversy regarding whether XRP constitutes a security due to its apparent centralized nature. However, Ripple executives counter this claim by stating that their majority ownership of XRP tokens doesn’t make the cryptocurrency to be decentralized.
While the uncertainty remains, Morgan Creek joins a list of major institutional focused cryptocurrency investment vehicles in the United States that have steered clear of the XRP token.
Details of the Cryptocurrency Index Fund
Writing for Forbes, Michael del Castillo highlighted some of the features of the Morgan Creek Digital Index Fund. The fund is backed by the Morgan Creek institutional investment enterprise that currently boasts $1.5 billion worth of assets under management (AUM).
According to the details released thus far, the fund provides institutional investors access to Bitcoin, Ethereum, and eight other top cryptocurrency tokens. It is a rules-based index fund under the management of Bitwise Asset Management which signed a partnership agreement with Morgan Creek earlier in the year. Commenting on the progress made thus far, Pompliano said:
We’re fully prepared and feel we’ve built something that institutional investors will find attractive regardless of how the assets are categorized. Whether they’re securities or not.
Do you think Morgan Creek was right to snub premined cryptocurrencies like XRP and XLM? Where do you stand on the debate whether XRP is a security? Let us know your thoughts in the comment section below.
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