Systems and methods for administering an exchange traded product (ETP) that operates entirely in cryptocurrency/blockchain
A crypto ETP is administered by a portfolio modeling computer/(PMC), a fund administration computer/(FAC), an order taking platform computer/(OTP), a custodian computer/(CC), and a paying agent settlement computer/(PASC). The PMC defines the ETP and captures data for a cryptocurrency index. The CC tracks Underlying Assets held by the ETP, and sends the data to the FAC, which calculates the NAV of the Underlying Assets to generate a Portfolio Composite File/(PCF) sent to the OTP. The OTP receives and validates/confirms with the CC, orders for creations and redemptions of the ETP from Authorized Parties/(APs), in exchange for the Underlying Assets and/or cryptocurrency. The PASC provides settlement on the Exchange in cryptocurrency by: receiving confirmation from the CC of transfer of underlyings, ETPs or cryptocurrency from the APs to a blockchain wallet associated with the PCM; and issuing units of the ETPs, underlyings or cryptocurrency to the APs.
1. A computing system comprising:
one or more processors;
one or more memories including instructions executable by the one or more processors to cause the one or more processors to perform operations including:
receiving a creation order for purchasing a number of units of an exchange traded product (ETP) that contains a cryptocurrency, wherein the creation order was submitted by an authorized participant;
based on receiving the creation order:
receiving a plurality of price quotes from a plurality of cryptocurrency exchanges for purchasing an amount of the cryptocurrency that corresponds to the number of units of the ETP, the plurality of cryptocurrency exchanges being separate from the computing system;
selecting a particular exchange from among the plurality of cryptocurrency exchanges, the particular exchange being selected based on the plurality of price quotes;
based on selecting the particular exchange, transmitting a communication over a computer network to the particular exchange, the particular exchange being configured to respond to the communication at least in part by executing a blockchain transaction that transmits the amount of the cryptocurrency to a blockchain wallet; and
instructing delivery of the number of units of the ETP to the authorized participant;
subsequent to the particular exchange executing the blockchain transaction, executing a blockchain explorer to receive updated portfolio data associated with the ETP;
based on the updated portfolio data, generating a Portfolio Composite File (PCF) that includes a current Net Asset Value (NAV) for the ETP;
encrypting the PCF to generate an encrypted PCF file; and
transmitting the encrypted PCF file via a secure connection to an order taking platform computer (OTP).
2. The computing system of claim 1 , wherein the blockchain wallet is associated with the authorized participant.
3. The computing system of claim 1 , wherein selecting the particular exchange involves:
receiving, from the authorized participant, a selection of a price quote among the plurality of price quotes.
4. The computing system of claim 1 , wherein the plurality of cryptocurrency exchanges each include an over-the-counter (OTC) desk and a respective order book.
5. The computing system of claim 1 , wherein the blockchain wallet is owned by a custodian that is separate from the computing system and the authorized participant.
6. The computing system of claim 5 , wherein the operations further comprise:
receiving, from a custodian computer of the custodian, a confirmation of the amount of the cryptocurrency associated with the creation order.
7. The computing system of claim 6 , wherein the custodian computer is configured to:
track cryptocurrency assets held by the ETP over time;
periodically generate portfolio data indicating an amount of cryptocurrency assets held by the ETP; and
provide the portfolio data for evaluation.
8. A method comprising:
receiving, by one or more processors of a computing system, a creation order for purchasing a number of units of an exchange traded product (ETP) that contains a cryptocurrency, wherein the creation order was submitted by an authorized participant;
based on receiving the creation order:
receiving, by the one or more processors, a plurality of price quotes from a plurality of cryptocurrency exchanges for purchasing an amount of the cryptocurrency that corresponds to the number of units of the ETP, the plurality of cryptocurrency exchanges being separate from the computing system;
selecting, by the one or more processors, a particular exchange from among the plurality of cryptocurrency exchanges, the particular exchange being selected based on the plurality of price quotes;
based on selecting the particular exchange, transmitting, by the one or more processors, a communication over a computer network to the particular exchange, the particular exchange being configured to respond to the communication at least in part by executing a blockchain transaction that transmits the amount of the cryptocurrency to a blockchain wallet; and
instructing, by the one or more processors, delivery of the number of units of the ETP to the authorized participant;
subsequent to the particular exchange executing the blockchain transaction, executing, by the one or more processors, a blockchain explorer to receive updated portfolio data associated with the ETP;
based on the updated portfolio data, generating, by the one or more processors, a Portfolio Composite File (PCF) that includes a current Net Asset Value (NAV) for the ETP;
encrypting, by the one or more processors, the PCF to generate an encrypted PCF file; and
transmitting, by the one or more processors, the encrypted PCF file via a secure connection to an order taking platform computer (OTP).
9. The method of claim 8 , wherein the blockchain wallet is associated with the authorized participant.
10. The method of claim 8 , wherein selecting the particular exchange involves:
receiving, from the authorized participant, a selection of a price quote among the plurality of price quotes.
11. The method of claim 8 , wherein the plurality of cryptocurrency exchanges each include an over-the-counter (OTC) desk and a respective order book.
12. The method of claim 8 , wherein the blockchain wallet is owned by a custodian that is separate from the computing system and the authorized participant.
13. The method of claim 12 , further comprising:
receiving, from a custodian computer of the custodian, a confirmation of the amount of the cryptocurrency associated with the creation order.
14. The method of claim 13 , wherein the custodian computer is configured to:
track cryptocurrency assets held by the ETP over time;
periodically generate portfolio data indicating an amount of cryptocurrency assets held by the ETP; and
provide the portfolio data for evaluation.
15. A non-transitory computer-readable medium comprising program code that is executable by one or more processors of a computing system to cause the computing system to perform operations including:
receiving a creation order for purchasing a number of units of an exchange traded product (ETP) that contains a cryptocurrency, wherein the creation order was submitted by an authorized participant;
based on receiving the creation order:
receiving a plurality of price quotes from a plurality of cryptocurrency exchanges for purchasing an amount of the cryptocurrency that corresponds to the number of units of the ETP, the plurality of cryptocurrency exchanges being separate from the computing system;
selecting a particular exchange from among the plurality of cryptocurrency exchanges, the particular exchange being selected based on the plurality of price quotes;
based on selecting the particular exchange, transmitting a communication over a computer network to the particular exchange, the particular exchange being configured to respond to the communication at least in part by executing a blockchain transaction that transmits the amount of the cryptocurrency to a blockchain wallet; and
instructing delivery of the number of units of the ETP to the authorized participant;
subsequent to the particular exchange executing the blockchain transaction, executing a blockchain explorer to receive updated portfolio data associated with the ETP;
based on the updated portfolio data, generating a Portfolio Composite File (PCF) that includes a current Net Asset Value (NAV) for the ETP;
encrypting the PCF to generate an encrypted PCF file; and
transmitting the encrypted PCF file via a secure connection to an order taking platform computer (OTP).
16. The non-transitory computer-readable medium of claim 15 , wherein the blockchain wallet is associated with the authorized participant.
17. The non-transitory computer-readable medium of claim 15 , wherein selecting the particular exchange involves:
receiving, from the authorized participant, a selection of a price quote among the plurality of price quotes.
18. The non-transitory computer-readable medium of claim 15 , wherein the plurality of cryptocurrency exchanges each include an over-the-counter (OTC) desk and a respective order book.
19. The non-transitory computer-readable medium of claim 15 , wherein the blockchain wallet is owned by a custodian that is separate from the authorized participant.
20. The non-transitory computer-readable medium of claim 19 , wherein the operations further comprise:
receiving, from a custodian computer of the custodian, a confirmation of the amount of the cryptocurrency associated with the creation order.