The cryptocurrency developer and its partners believe the product structure could also be used to fund other impact-linked areas.
The Cardano Foundation and Switzerland for UNHCR have collaborated to launch a new exchange traded product (ETP) that will funnel rewards for investment in a blockchain pool into a stream of funding for UNHCR, the United Nations’ refugee agency, potentially worth up to $2m (€1.76) a year.
The Cardano Impact for UNHCR ETP allows investors to donate all of the so-called staking rewards from an investment in blockchain platform Cardano’s digital currency to fund UNHCR’s emergency response and refugee programmes in more than 135 countries. The ETP was launched on 28 May on the SIX Swiss Exchange, Switzerland’s main stock exchange.
Staking rewards are extra cryptocurrency generated as returns for investors to encourage them to place their digital tokens in a given blockchain network. Directing these rewards to an organisation such as UNHCR does not reduce the underlying digital assets.
Annual donations
The Cardano Foundation is a Swiss-based non-profit set up to advance the Cardano platform as a public infrastructure. Cardano’s cryptocurrency is currently one of the world’s top ten in terms of its market capitalisation, which stands at around $22bn, according to the foundation. Its currency is known as the ADA, named after computer pioneer Ada Lovelace. On 27 May, 1 ADA was worth €0.68.
The Cardano Foundation said that, based on current ADA staking yields of around 3.5% and projections of fund inflows, the ETP could generate $1.5m-$2m in annual donations for UNHCR with $50m in assets under management.
Contributions to the underlying stake pool so far include 3.5m ADA from the Cardano Foundation, alongside more than 200 holdings delegated to the pool by the HOSKY group of ADA investors and their supporters, making a total of 6.3m ADA.
Investors in the ETP can withdraw their contributions to the staking pool at short notice, making it a flexible investment. Cardano said institutions could invest using US dollars, Euros or Swiss francs and that no blockchain knowledge was required.
Replicable impact solution
Oliver Anselmo, deputy executive director at Switzerland for UNHCR, described the ETP launch as a world first in sustainable finance and humanitarian aid.
“It transforms passive investment returns into a recurring, scalable stream of support for people who have lost everything,” he said.
Switzerland for UNHCR is the national partner of the UNHCR in Switzerland and Liechtenstein, mobilising resources and raising awareness related to the refugee organisation’s activities .
Frederik Gregaard, the Cardano Foundation’s CEO, said blockchain had the potential to provide innovative ways of helping those seeking refuge.
“With the technology and use cases now at a stage where they have the capacity to substantially facilitate daily operations, the widespread adoption of humanitarian blockchain solutions must become one of the industry’s key priorities,” he said.
The ETP has been structured by issuance.swiss, a Swiss-based issuer of regulated digital asset products. The issuer described the ETP as an industry-first that merged full regulatory compliance, institutional-grade staking infrastructure, and humanitarian aid in one product.
Pavel Izmaylov, CEO of issuance.swiss, said the model could and should be replicated.
“Discussions are already underway to launch additional impact-linked ETPs supporting education, climate resilience, and public health within the next six to 12 months,” he said.
Custody and staking for the ETP are operated by Taurus, a securities and digital asset infrastructure firm, based in Geneva.
