The world’s leading index provider, S&P Dow Jones Indices, has partnered with New York City-based crypto asset software and data firm Lukka to launch investor-focused cryptocurrency services.
According to a Dec. 3 announcement, the indexing giant “will provide S&P DJI-branded and customized indexing and benchmarking solutions supported by Lukka’s proprietary crypto asset pricing data.” The firms explained the reasoning behind the launch of the new service:
“As the market for cryptocurrency assets has evolved in recent years, investor interest in benchmarking and index-based solutions based on crypto and blockchain assets has grown and reinforced the need for reliable pricing data.”
In another step towards mainstream acceptance of cryptocurrency, S&P DJI will use Lukka’s reference data and market value-focused pricing methodology for cryptocurrencies. Those new capabilities will allow the index provider to facilitate access to cryptocurrencies through its network. Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices said:
“With digital assets such as cryptocurrencies becoming a rapidly emerging asset class, the time is right for independent, reliable and user-friendly benchmarks. We’re excited to work with Lukka, who has been at the forefront of digital asset data services, to promote more transparency in this nascent sector.”
One of the main business purposes of an index, such as the S&P 500, is to license it to mutual funds and exchange traded funds (ETF), allowing investors to track the value of an asset class by following an index with a basket of those assets. One of the main reasons the U.S. Securities and Exchange Commission (SEC) has not yet approved a cryptocurrency ETF is concern about the potential for market manipulation in the industry.
Lukka CEO Robert Materazzi said that the partnership “bridges the gap between the crypto asset ecosystem and traditional financial services.”
He explained that he believes that “in a rapidly maturing industry” such as crypto, it is necessary to build to institutional standards, and working with major brands like S&P DJI provides that. He noted that the systems are compliant with the American Institute of CPA’s industry-standard AICPA SOC Controls.
The move is part of an ongoing trend that sees traditional finance giants partnering with cryptocurrency firms to launch new services dedicated to crypto assets. When it comes to indices specifically, one example is the collaboration that saw cryptocurrency data firm CoinMarketCap launch its indices on NASDAQ and Bloomberg in March last year.