Since its founding in 2018, Australia-based digital asset company Zerocap has been in a key position to observe the development of structured product spaces operating OTC, market production, derivatives and cryptocurrency operations.
Here, Mark Hiriart, sales manager at Zerocap, discusses how these products are changing, the new semi-normal protective products his company is launching, how demand for structured products changes depending on geographical area, and the most unusual structured product requests he has seen.
Please tell me about Zerocap.
Zerocap is Australia’s leading institutional digital asset company founded in 2018. He operates multiple business lines, including OTC desks, market production and derivatives business. We operate as a certified corporate representative for Australian Financial Services License (AFSL) holders. It allows the trade of financial instruments such as derivatives with certified wholesale investors. It also established many well-known partnerships with institutions like ANZ Bank for Stablecoin and with Reserve Bank of Australia (RBA) for various concepts and pilots. We have become Australia’s leading liquidity players for the past 18 months, but our reach ranges from clients in over 50 countries.
We recently announced a new product. Please tell me about that.
We partnered with Coindesk Indices to launch a semi-primitive structure on the Coindesk 20 index (CD20). This product offers upward exposure to CD20 with key protection limiting the main protection to 5%, offering the possibility of a return of up to 40%. This is the first of a set of structured products to create with the Coindesk index, featuring a variety of rewards for different risk appetites.
Timing is particularly relevant given current market sentiment. By navigating the rallies of digital assets around Trump and potential global trade defies, we anticipate some side-way behavior in the short term. This risky exposed product is suitable for current macro environments.
What markets does your new product fill in what gaps and who is it designed for?
In the digital asset sector, we have not established benchmarks that are typical of traditional markets. For example, if an Australian investor or someone in Hong Kong wants us to be exposed to technology, they usually look for products linked to Nasdaq or QQQ ETFs. In ciphers, there was no indexing at that level yet. This product is designed for three groups. A family office and a wealthy online individual trying to enter the space. Investors want broad crypto exposure without diving deep into individual assets. And people who understand Bitcoin but want a diverse exposure with controlled risks.
Why did you choose it based on Coindesk 20 index?
I chose the Coindesk 20 index for four important reasons. One is to deeply respect the quality of the Coindesk brand and its index team. Second, its strong relationship with Bullish provides access to futures contracts for hedging. The third is that index products in the crypto space are needed for clear markets. And finally, my background in equity derivatives at investment banks shows how people use these products, and that’s a natural evolution of cryptography.
How are structured products evolving?
Two main factors have limited adoption of historically structured products. One means that a simple spot position can provide important returns. The two are the prevalence of permanent futures to increase the decline in demand in the options market. However, that balance is changing as more participants retain their structural position. Venture funds, portfolio managers with value-based allocation policies, and large mandate holders need specific hedging solutions that cannot be delivered permanently due to their pass dependence.
What is the impact of Crypto ETFs on structured products?
Rather than cannibalizing them, ETFs act as “gateway drugs” for structured products. With the introduction of products like BlackRock ETF, new participants have become crypto spaces. As these investors become accustomed to exposure to crypto via ETFs, they naturally move on to explore more refined products to enhance return or risk management.
What institutional demand patterns do you see for cryptographic products in Asia and other regions?
Asia usually shows a strong appetite for automotive structures. Automotive structures allow investors to sell downsides and receive large coupons based on price targets. This differs from the more conservative approaches of the US and European markets. I worked in equity derivatives trading at JP Morgan and Morgan Stanley, so I saw first hand the differences between these regions.
Australia is somewhere in between, and Zerocap has managed to convert unstructured product players into Crypto structured product users. We are considering extending this expertise to Asia, subject to regulatory requirements.
Do we risk overengineering the instability of the existence of cryptographic codes?
As cryptos develop, different assets naturally have different volatility profiles. Stablecoins maintain stability and Bitcoin volatility can be weakened with facility adoption, but there are still plenty of opportunities for altitude exposure below the market capitalization curve, from Solana to Memecoins. The market is mature to meet the needs of a wide range of investors. Portfolio allocations require investors to have a wide range of beta exposure through established assets such as Bitcoin and ether, whether it is 1%, 2%, or 5%.
What is the rarest structured product request you’ve seen?
We are one of the few desks offering derivatives on ALT coins, so we are asked to price something wild and quirky. You can officially confirm that you recently swapped options with Fartcoin. This is extremely important for those who have spent their careers at major US banks.
With that in mind, where do you think defi and traditional structured products intersect?
Defi and structured products present interesting opportunities, but it is necessary to acknowledge that cryptography is already complex and structured products add another layer of complexity. However, tokenization makes sense for legal documents and solubility, as it allows you to audit the source code to understand exactly what you are getting. This space grows with real-world asset (RWA) tokenization, but widespread adoption can take time.
When do you think digital assets will become long-term investments?
When protocols and tokens demonstrate clear value propositions and use cases, a transition from trading vehicles to long-term investments occurs. Bitcoin has proven to be considered digital gold, but calling it “ultrasound money” is still controversial. Other protocols are still fighting to find a niche and demonstrate concrete values ​​in the digital economy. Once these assets are integrated into the economic system, their long-term value proposition becomes more measurable.
For more information, please visit https://zerocap.com/.
The author’s opinions and opinions are unique and not related to the Coindesk index. The interview was conducted by Coindesk Indices and is not related to editing Coindesk.
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