CoinMarketCap Launches CMC20 — Index Tokens Compete

CoinMarketCap launched CMC20 on Monday, November 17th—a new "index token" that tracks a basket of the top 20 cryptocurrencies by market capitalization.

This concept addresses the growing demand for diversified crypto exposure and provides an on-chain alternative to multi-coin exchange-traded funds (ETFs) and similar investment products.

Explaining Crypto Index Tokens

CMC20 provides weighted exposure to the top 20 cryptocurrencies, excluding stablecoins, wrapped tokens, and investment challenges. (CoinMarketCap cited XMR, which is virtually illegal in many jurisdictions, as an example of a coin it will exclude.)

The new token is designed to be decentralized and permissionless, with issuance and redemption governed by the Reserve Protocol, and live trading is now available on PancakeSwap and Trust Wallet.

This index, dubbed the "crypto version of the S&P 500," is rebalanced at the end of each month to account for any changes in rankings and weightings.

Meanwhile, S&P itself is entering the crypto index space and plans to launch the S&P Digital Markets 50 Index (DM50).

Unlike the CMC20, the DM50 includes a mix of crypto and equity exposure, covering 35 publicly traded crypto companies and fifteen cryptocurrencies selected by S&P. A token tracking the benchmark is being developed by Dinari.

An Alternative to Off-Chain Trackers

Although both indices offer a different approach to coins, the CMC20 and DM50 share the same underlying concept—diversified asset exposure in the form of tokens. Thus, both can be seen as alternatives to more traditional, off-chain crypto trackers.

In Europe, CoinShares and 21Shares offer various multi-asset crypto exchange-traded products (ETPs). These range from simple offerings combining BTC and ETH exposure to more diversified altcoin ETPs.

In the US, the Securities and Exchange Commission (SEC) has not approved multi-coin ETFs structured under the Securities Act of 1933, which is the preferred method of ETF authorization.

However, in recent months, companies like Grayscale and 21Shares have used an alternative structure under the Investment Company Act of 1940 to launch new products.

Funds issued under the 1940 Act cannot have 100% spot exposure, so they rely on derivatives and crypto-backed securities. For example, a new ETF launched by 21Shares on November 13 will invest in the asset manager's European ETPs.