FAQ

Investing in Virtune's ETPs offers several distinct advantages for you as an investor:

Simple and Secure: You avoid the complexity of creating and managing a digital wallet, as well as the challenges of selecting a secure cryptocurrency exchange for trading. All aspects of security and storage are handled by us.

Tax Efficiency: Investing in our ETPs can be associated with tax benefits. In Sweden it is possible to invest in our ETPs through an Investment Savings Account (ISK) or a Capital Insurance means you do not need to declare individual transactions. Instead of a 30% capital gains tax on direct cryptocurrency trading, you pay an annual fixed tax, which can provide significant tax benefits.

Regulated Trading Venue: Our products are traded on Nasdaq Stockholm, a regulated and secure marketplace, adding an additional layer of safety and reliability to your investment.

Physically Backed Products: All our ETPs are 100% physically backed, meaning that actual cryptocurrencies are stored corresponding to the market value of each ETP, ensuring transparency and trust.

Staking Opportunities: Some of our products also offer staking, which is managed by us and provides extra returns without any effort required from you.

Virtune is a Swedish company based in Stockholm, registered as a financial institution with the Financial Supervisory Authority, with an EU-approved base prospectus for the market listing of crypto ETPs. We strive to be the safe choice for your crypto investments.

Virtune's ETPs are always 100% backed by equivalent cryptocurrencies stored in cold storage at Virtune's Nasdaq-approved custodian. The underlying cryptocurrencies determine the price of the ETPs. Price movements are always based on a 1:1 correlation to the underlying cryptocurrencies.

A product being physically backed means that its value is directly correlated with an actual quantity of assets, in this case, cryptocurrencies. For each product offered, we ensure that there is a corresponding amount of the underlying cryptocurrency, equivalent to at least 100% of the product's value, at all times. These cryptocurrencies are securely stored through an advanced security system known as ”cold storage”, which means they are kept offline to maximize protection against unauthorized access or cyberattacks. The storage is managed by a specialized custodian, guaranteeing that investors' assets are protected with the highest possible security standards.

Our products are listed on exchanges such as Nasdaq Stockholm and Boerse Stuttgart, and they can be traded through online brokers like Avanza and Nordnet. We are continuously working to expand the availability of trading our products on more exchanges and investment platforms, both within Sweden and internationally.

The products are priced based on a 1:1 correlation to the performance of the underlying cryptocurrencies that the products follow, minus a management fee. Each cryptocurrency is priced based on regulated and proven cryptocurrency reference rates.

The product follows a rule-based investment strategy and is rebalanced on a monthly basis. The allocation of cryptocurrencies is value-weighted based on each cryptocurrency's market capitalization, with a maximum weight of 40% for each cryptocurrency to promote diversification.

The Virtune Crypto Top 10 Index ETP follows an index with a rule-based investment strategy (Virtune Vinter Crypto Top 10 index) that includes up to the top 10 cryptocurrencies based on market capitalization. Additional criteria are then applied for each cryptocurrency, such as not being a stablecoin (a cryptocurrency whose value is always intended to be the same as a fiat currency, typically the US dollar). The product is listed on Nasdaq Stockholm, which means we also need to adhere to the cryptocurrencies included in Nasdaq Crypto Index. In summary, this means that cryptocurrencies need to meet the criteria of two indexes to be included in the product.

Yes, you can buy all of our products via your ISK and Capital Insurance.

No, not if you buy our products via an ISK or capital insurance. But if you buy our products via a traditional/regular custody account, you need to declare each of your purchases/sales to the Swedish Tax Agency in your annual declaration.

You can find fact sheets and additional information about each ETP on the product pages of our website. Additionally, KIDs are available on platforms such as www.avanza.se and www.nordnet.se.

The cryptocurrencies held at our custodian are always segregated from our own balance sheet. We have chosen to include a collateral agent whose purpose is to protect and represent the investors in our ETPs. In an unlikely event where Virtune would become insolvent or go bankrupt, our collateral agent would take over the operations, sell of the cryptocurrencies, and subsequently redeem all ETPs, paying out the relevant amount minus fees in SEK or EUR to all ETP holders.

We have chosen to collaborate with the Law Debenture Trust Corporation as our collateral agent. By having a collateral agent, we reduce the credit risk to Virtune as the issuer, making our ETPs a safer choice for your investments.

Virtune is a regulated digital asset manager that offers crypto-related exchange traded products (ETPs). We are registered as a financial institution with the Swedish Financial Supervisory Authority (Finansinspektionen) and are the issuer of crypto ETPs with an EU-approved base prospectus. Our mission is to lower the barriers to crypto by providing a secure and regulated way for investors to gain exposure to the cryptocurrency market.

Virtune was founded in 2022 and our headquarters is located at Kungsgatan 26 in Stockholm, Sweden. We are a Stockholm-based and Swedish-owned company.

Virtune is a registered financial institution with the Swedish Financial Supervisory Authority and has an EU-approved base prospectus for the issuance of crypto-ETPs in Europe, which means that we are subject to regulatory oversight in multiple areas. We adhere to strict compliance and risk management procedures to ensure the highest level of security for our investors' assets.

Staking enables cryptocurrency owners to earn passive income by participating in the validation and confirmation of transactions on a blockchain through a process known as Proof of Stake. This mechanism is a fundamental component of Proof of Stake blockchains, like Ethereum, and plays a vital role in ensuring the security and authenticity of blockchain transactions. To facilitate a transaction on the blockchain securely and accurately, a validator must stake a certain amount of cryptocurrency as a guarantee of the transaction's legitimacy. The validator aims to stake as much cryptocurrency as possible to increase the likelihood of receiving rewards, which are paid out in the same type of cryptocurrency that was staked. For instance, if you stake Ethereum, you receive additional Ethereum as a reward. The annual reward percentage for staking can vary and may range from 0-14% or higher for some blockchains. Most cryptocurrency holders cannot act as validators themselves, as it requires significant amounts of cryptocurrency. Therefore, many choose to stake their assets through an established and trusted validator.

Staking enables investors to retrieve additional return on a cryptocurrency on top of the potential value growth of the relevant cryptocurrency. This is being made by contributing to the blockchain by participating in validating transactions, which is a natural part of a cryptocurrency blockchain that uses proof-of-stake. By staking cryptocurrencies, this is also avoids being diluted by inflation in the blockchain network. The annual reward rate vary between different cryptocurrencies, but is usually between 2-14%. In Virtune Staked Ethereum ETP, 75% of the annual rewards are being returned to the investors that have invested in the ETP, meaning that the NAV (Net Asset Value) can increase over time through the staking rewards. The remaining 25% are allocated to the custodian, staking provider and Virtune for managing and maintaining the staking operations of the ETP. For Polkadot, although the staking reward may vary, Virtune always guarantees a 4% reward to the product.

There are two main risks associated with staking: lockup periods and slashing.Lockup periodsLockup periods in staking refer to a time frame during which the staked cryptocurrency remains locked and cannot be readily moved or sold. It's similar to an interest savings account where your assets are tied up for a specific period. The length of the lockup period can vary, ranging from 0 days up to 21 days, depending on the specific staking protocol or platform. During this period, you won't have immediate access to your staked cryptocurrencies, which means you can't quickly sell or move your investment, even if the market conditions are unfavorable. To address this risk, Virtune diligently monitors and analyzes the market to ensure the staked portion of an ETP (Exchange Traded Product) maintains an adequate level of liquidity. This ensures that the ETP can be traded normally at all times. Slashing is a penalty imposed on the cryptocurrencies that are staked with a validator, which can have an impact on the staked funds. This penalty is incurred when a validator engages in certain undesirable behaviors, such as validating incorrect transactions or going offline.The specific reasons and conditions for slashing can vary across different cryptocurrencies and blockchain networks. Generally, the penalty results in a reduction of a small percentage of the staked cryptocurrencies. It's important to note that the exact percentage and consequences of slashing can vary depending on the protocol. When engaging in staking, it is crucial to choose a trustworthy and reputable validator. Virtune takes this aspect seriously and exclusively selects established, regulated, and leading staking providers to ensure minimal risk. We ensure minimum slashing risk by partnering with reputable and regulated staking-provider such as Coinbase.

Slashing is a penalty imposed on the cryptocurrencies that are staked with a validator, which can have an impact on the staked funds. This penalty is incurred when a validator engages in certain undesirable behaviors, such as validating incorrect transactions or going offline. The specific reasons and conditions for slashing can vary across different cryptocurrencies and blockchain networks. Generally, the penalty results in a reduction of a small percentage of the staked cryptocurrencies. It's important to note that the exact percentage and consequences of slashing can vary depending on the protocol. When engaging in staking, it is crucial to choose a trustworthy and reputable validator. Virtune takes this aspect seriously and exclusively selects established, regulated, and leading staking providers to ensure minimal risk. We ensure minimum slashing risk by partnering with reputable and regulated staking-provider such as Coinbase.

No, we never lend or send cryptocurrencies to any third party. We exclusively utilize non-custodian staking, which means all staking is being made directly from cold-storage at our custodian.

Virtune exclusively uses non-custodial staking. This approach ensures that cryptocurrencies being staked remain securely stored in cold storage within our own custodian, minimizing theft risks and eliminating the dependence on a third-party service. The staking process is conducted directly from digital wallets, offering enhanced security and control. All cryptocurrencies staked by Virtune are consistently stored in cold storage, widely recognized as one of the safest methods for cryptocurrency storage.

On the other hand, custodial staking involves users transferring their cryptocurrencies to another entity for the purpose of staking. This method carries risks such as potential theft, as users' cryptocurrencies are managed and stored by someone else. For these reasons, and due to regulatory considerations, Virtune does not engage in custodial staking.

No, staking is only applicable to cryptocurrencies that rely on the proof of stake consensus mechanism. For example, Ethereum, the second-largest cryptocurrency, underwent a transition from proof of work to proof of stake in April 2023, allowing it to be staked. However, Bitcoin, the largest cryptocurrency, utilizes the proof of work mechanism, where new coins are generated through mining. As a result, Bitcoin cannot be staked. Staking is specific to cryptocurrencies that have implemented and support the proof-of-stake model. What is the difference between proof of work and proof of stake? Proof of Work (PoW) and Proof of Stake (PoS) are two different consensus mechanisms used in blockchain networks to achieve consensus and validate transactions. Below are examples of the most relevant differences.

Staking rewards are continuously added to the product, resulting in the additional returns generated from staking being reflected in the daily price and Net Asset Value (NAV) of the product.

For Ethereum, the staking rewards have fluctuated between 4% and 8% for the majority of 2023. These rewards are influenced by several factors, including the proportion of all Ethereum (ETH) that is staked, leading to variations in the reward rate over time. Virtune stakes up to 80% of our ETH holdings and guarantees that at least 75% of these staking rewards are always reinvested in the product. For Polkadot, although the staking reward may vary, Virtune always guarantees a 4% reward to the product.

Yes, all our staking products, including Virtune Staked Ethereum ETP, can be freely traded on the market without any form of lock-in. This is made possible by employing a flexible staking strategy where a portion of the holdings, for example, up to 80% for Virtune Staked Ethereum ETP, is actively staked while the remaining part is kept unstaked. This strategy ensures that the products remain liquid and available for trading, while also allowing investors to benefit from the additional returns that staking offers.