Crypto ETP Administration With Intraday NAV And Blockchain Settlement

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Solution Overview

Problem

Conventional OMS systems are inadequate for managing exchange-traded products (ETPs) involving cryptocurrencies due to challenges in accurately determining the value of highly volatile crypto assets, leading to issues like slippage, pricing discrepancies, and the inability to settle transactions efficiently without cash.

Innovation Solution

A system and method that leverages crypto-native infrastructure, including crypto-denominated accounting, blockchain settlement, and specialized computers to manage crypto ETPs, enabling slippage-free transactions, real-time pricing, and cash-less settlement.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Measurement precision

If conventional OMS systems are used to manage crypto ETPs, then existing infrastructure can be utilized, but accurate pricing and valuation become problematic due to high volatility of crypto assets

Engineering Contradiction:

Improvepricing accuracyVSAvoidvaluation reliability

Core Design Contradiction:

Measurement precisionVSReliability

Solution Approach 1:

The system changes the parameter of valuation timing from periodic (end-of-day) to continuous (real-time) by implementing intraday NAV calculations that update continuously based on current crypto asset prices, thereby maintaining pricing accuracy despite high volatility

Inventive Principle:

Principle #35Parameter changes

Solution Approach 2:

The patent introduces an intermediary mechanism in the form of a specialized crypto ETP OMS system that acts as a mediator between conventional OMS infrastructure and crypto asset volatility, using cryptographic proof and blockchain data to ensure reliable valuation

Inventive Principle:

Principle #24Intermediary (Mediator)

2Productivity

If conventional settlement processes are used, then existing financial infrastructure can be leveraged, but slippage and pricing discrepancies occur due to transaction delays

Engineering Contradiction:

Improvesettlement efficiencyVSAvoidpricing accuracy

Core Design Contradiction:

ProductivityVSMeasurement precision

Solution Approach 1:

The system performs preliminary actions by calculating and locking in intraday NAV values before transactions are executed, ensuring that pricing is determined in advance based on current market conditions, which eliminates slippage and pricing discrepancies during settlement

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The patent implements continuous NAV calculation and updating throughout the trading day, maintaining uninterrupted pricing accuracy from morning to close, thereby eliminating gaps where slippage could occur

Inventive Principle:

Principle #20Continuity of useful action

3Reliability

If cash-based settlement is used, then traditional accounting methods can be applied, but counterparty risk increases and cash management becomes complex

Engineering Contradiction:

Improvesettlement reliabilityVSAvoidcash management complexity

Core Design Contradiction:

ReliabilityVSDevice complexity

Solution Approach 1:

The patent replaces the mechanical cash-based settlement system with a cryptographic digital asset settlement system, where crypto assets are transferred directly on the blockchain, eliminating the need for cash management while maintaining settlement reliability through cryptographic proof

Inventive Principle:

Principle #28Mechanics substitution (Replace mechanical system)

4Adaptability or versatility

If conventional OMS systems are used, then existing software infrastructure can be utilized, but the system cannot handle the specific requirements of crypto ETPs including intraday NAV calculation and crypto-native settlement

Engineering Contradiction:

Improvesystem adaptabilityVSAvoidsystem complexity

Core Design Contradiction:

Adaptability or versatilityVSDevice complexity

Solution Approach 1:

The patent segments the OMS functionality into distinct modules: crypto asset valuation module, intraday NAV calculation module, blockchain settlement module, and authorized participant interaction module, allowing each component to be optimized independently for crypto-specific requirements

Inventive Principle:

Principle #1Segmentation

Data Source

PatentUS12450658B2Systems and methods for administering an exchange traded product (ETP) that operates entirely in cryptocurrency/blockchain

Publication Date: 2025.10.21 JURA PENTIUM AG

AI summary

A crypto ETP is administered by a portfolio modeling computer/(PMC), a fund administration computer/(FAC), an order taking platform computer/(OTP), a custodian computer/(CC), and a paying agent settlement computer/(PASC). The PMC defines the ETP and captures data for a cryptocurrency index. The CC tracks Underlying Assets held by the ETP, and sends the data to the FAC, which calculates the NAV of the Underlying Assets to generate a Portfolio Composite File/(PCF) sent to the OTP. The OTP receives and validates/confirms with the CC, orders for creations and redemptions of the ETP from Authorized Parties/(APs), in exchange for the Underlying Assets and/or cryptocurrency. The PASC provides settlement on the Exchange in cryptocurrency by: receiving confirmation from the CC of transfer of underlyings, ETPs or cryptocurrency from the APs to a blockchain wallet associated with the PCM; and issuing units of the ETPs, underlyings or cryptocurrency to the APs.