What does “基金etc” mean?

08/15/2023 22:30 • Metaverse & Beyond • 68 views

What does “基金etc” mean? “基金etc” refers to various companies that invest in various cryptocurrencies. Under certain conditions, they can operate their own asset management business according to certain rules, such as stock issuance, foreign exchange trading services, and other similar investment financial products. However, without such regulations, this type of company or institution cannot operate.

So why is that? According to the “Securities Law,” any enterprise can price and measure specific digital currencies held or sold by itself; and these tokens can also circulate as corresponding fund shares on other platforms. This also means that funds and related derivatives can be regulated and constrained by relevant laws and regulations, so it can be considered as a security.

Funds and their related products are also called “期货合约” (fundation contracts). Their main purpose is to realize the process of buying and selling digital currencies through cooperation with certain market participants. For example, an American exchange deposits a digital currency into the exchange, then converts the digital currency into another digital currency, and exchanges it with Bitcoin for two other fiat currencies in order to obtain the price changes of Bitcoin.

Therefore, for some people who are not familiar with encryption technology, they may think that this is not a good idea. Actually, it’s not true. They may ask: Since we have this idea, why do we do it this way? The reason is simple:

1. Many companies currently operate funds using different methods, including the structure of traditional trust companies. However, due to their different operation methods, this makes the difference between funds and traditional equity products. Ordinary investors cannot directly purchase some commodities other than funds, and they also need to provide information on the source of funds to third parties, which leads to changes in customer demand and thereby causes problems in fund liquidity risk.

2. There are significant differences between funds and other digital assets: firstly, there is a large price difference between funds in different markets; secondly, there are significant differences between the two; thirdly, it is determined by certain aspects of the relationship between governments in different regions; fourthly, a part of domestic funds belong to the fund industry, so generally, funds in the fund industry do not have a high correlation; fifthly, most of them are homogenized, with most being dividend-based, which means that when there are problems with the fund party, part of the profits in all funds will be automatically liquidated.

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What does “基金etc” mean?

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