MSCI unveils its first digital asset indices

MSCI has launched its first indices helping investors evaluate sources of risk and return across the global digital assets ecosystem.

The firm’s debut includes indices that track the performance of crypto assets across three dimensions:

The MSCI Global Digital Assets Indices consist of two separate indices that represent the performance of the largest 20 or 30 crypto assets (excluding stablecoins) as measured by their full market capitalizations.

The MSCI Global Digital Assets ex Proof-of-work Index, meanwhile, comprises crypto assets, selected by market capitalization, that do not rely on a proof-of-work consensus mechanism. Proof-of-work consensus mechanisms have been criticized for requiring substantial energy-consuming computational work to create new blocks on the blockchain.

Finally, the MSCI Global Digital Assets Smart Contract Index tracks crypto assets, also selected by market capitalization, that are associated with technology platforms supporting ‘smart contracts’, digital programs that run on a blockchain.

MSCI’s digital asset indices were developed in collaboration with Menai Financial Group, a provider of institutional-grade crypto asset investment products and trading services, and Compass Financial Technologies, a leading service provider specializing in the design, calculation, and publication of financial indices. Compass’s range of individual digital asset indices serves as the foundational building blocks for MSCI’s new blended indices.

The indices harness MSCI’s proprietary classification system for the digital assets ecosystem – known as ‘datonomy’ – which seeks to classify coins and tokens based on how they are used, providing a standardized way to help market participants analyze the digital assets ecosystem.

Commenting on the new indices, Stephane Mattatia, Head of Thematic Indices at MSCI, said: “The digital assets ecosystem is evolving rapidly along with investor demand for tools and solutions to help navigate this new asset class. Global investors are looking for greater transparency and insight into these markets and how best to participate in them in a manner that meets their high standards for professionalism, scale, risk management, and security.

“The launch of these indices embodies MSCI’s commitment to bringing clarity to diverse asset classes and to creating solutions that capture long-term, disruptive investment trends. MSCI takes a systematic and process-oriented approach in providing information to help investors gain transparency and make better investment decisions.”