Grayscale and CoinDesk launch an institutional DeFi fund and index

Digital asset manager Grayscale Investments is launching a DeFi Fund and index, as announced by Grayscale CEO Michael Sonnenshein. The new fund joins a growing number of offerings to help investors easily bet on decentralized finance (DeFi).

Grayscale Investments, the world’s largest digital currency asset manager, and CoinDesk Indexes, a subsidiary of CoinDesk Inc., the most influential, trusted platform for a growing global community engaged in the transformation of the financial system and the emerging crypto economy, announced Monday the launch of Grayscale Decentralized Finance (DeFi) Fund, a new diversified investment product, and the CoinDesk DeFi Index.

Speaking on Squawk Box, Sonneshein said the firm has seen interest from a broad base of its existing investors — along with prospective ones — for DeFi assets. As a result, the firm has developed an institutional-grade index, along with a fund.

“Grayscale continues to focus on creating opportunities for investors to access new, exciting parts of the digital asset ecosystem,” said Sonnenshein. “The emergence of decentralized finance protocols provide clear examples of technologies that can redefine the future of the financial services industry. We’re proud to offer investors exposure to DeFi through Grayscale’s trusted, secure, and industry-leading investment product structures.”

The companies, both subsidiaries of CoinDesk parent Digital Currency Group (DCG), wrote in a joint press release the Grayscale DeFi Fund provides “exposure to a selection of industry-leading DeFi protocols through a market-capitalization weighted portfolio.” The idea is that investors can allocate money toward DeFi without having to buy the tokens directly.

Commenting on other institutional investment possibilities for crypto, Sonnenshein stated that a Bitcoin exchange-traded fund (ETF) approval in the United States will eventually happen. As previously reported, the Grayscale CEO remarked that the market was a “couple of points of maturation” away from seeing an approved ETF.

The CoinDesk DeFi Index is a new product from TradeBlock, one of the first firms to develop an index for professional investors to track Bitcoin when it launched the XBX Index in 2014. CoinDesk announced its purchase of TradeBlock for an undisclosed sum in January.

DeFi, which consists of blockchain-based software protocols designed for the trading and lending of cryptocurrencies, is one of the fastest-growing segments of the digital asset industry. The amount of collateral locked into the protocols has increased 19-fold over the past year to about $50 billion, and prices for many of the platforms’ associated tokens have soared.