Crypto data often fails to meet institutional standards of reliability and consistency, according to Marco Della Torre, CEO of Venn by Two Sigma.
“Similarly, the workflows and rigor that allocators, managers and advisors require to evaluate the role of digital assets in their portfolios have also been unavailable,” he told Traders Magazine.
Venn is seeking to address this barrier to participation, by announcing an alliance with Coin Metrics, an institutional crypto financial intelligence provider.
Capital allocators will be able to more readily analyze the role of digital assets using crypto reference rates provided by Coin Metrics within Venn, alongside traditional portfolio construction, analysis and other long term allocation workflows, Della Torre said.
Calculated in U.S. Dollars and Euros for over 475 assets, Coin Metrics’ reference rate data will provide Venn users with reliable digital asset returns data that they can use to help create powerful, factor-based workflows.
Coin Metrics’ reference rates are derived from a multitude of high-quality constituent markets.
The calculation methodology used to determine the rates is transparent to all participants on their website.
Tim Rice, co-founder and CEO of Coin Metrics, said: “Coin Metrics’ independent and transparent crypto asset prices will power Venn’s factor models and scenario analysis as asset allocators add crypto to their portfolios and gain a better understanding of the relevant impact. We’re proud to bolster Venn’s investment platform as part of our joint efforts to support a new wave of institutional crypto investors.”
According to Della Torre, the sheer volume of crypto data and data sources is immense, even if only considering pricing data.
Then there’s other on-chain data to consider, the fact that crypto exchanges are operating 24-hrs a day, 365-days a year globally, and the significant lack of standardization across the entire digital asset landscape, he added.
According to Della Torre, one of the key benefits of Venn is that they only require returns (i.e. performance) data from the user to conduct analysis and incorporate an asset into their platform, and that remains true for digital assets.
“Essentially, this makes it easier to analyze contribution to risk across sources, or conduct sophisticated risk and return analysis,” he said.
This includes analysis of an overall portfolio, sleeve, manager, or an individual digital asset, he added.
“In short, Venn is seeking to enable the analysis of digital assets within familiar institutional-grade workflows for asset allocation purposes,” Della Torre said.
The integration of Coin Metrics data into the Venn platform is one element of a broader strategy to support allocators seeking to contextualize crypto in a multi-asset portfolio.
In August, Venn announced a collaboration with Coinbase Institutional to help educate institutional investors on the digital asset space through a series of informational resources.
“It’s clear institutional interest in digital assets is on the rise,” Della Torre said.
“We want to work alongside our clients – wealth managers, family offices, endowments, foundations, pensions, insurers, and other institutional investors – to help them each develop their own strategy for the asset class, empower them with the insights needed to help contextualize crypto within their multi-asset portfolios and, critically, to talk to their clients or constituents about it in a more deeply informed way,” he added.