Last week, S&P Dow Jones Indices (S&P DJI) launched its new series of digital asset benchmarks. They are:

• S&P Bitcoin Index;
• S&P Ethereum Index; and
• S&P Cryptocurrency MegaCap Index (measures the performance of Bitcoin and Ethereum combined. Later this year, the S&P indices series will include additional coins).

These aren’t your grandmother’s FTSE nor are these particularly similar to the first global index Charles Dow created in 1884—in part because the appeal of cryptocurrencies to investors is they operate outside the parameters of traditional business assets and expensive financial institutions.

As such, while we can expect currencies to start promoting their returns as “top quartile vs the S&P benchmark,” they are not useful tools for the audit or business valuation profession. They do not reflect economic conditions or cost of capital assumptions for closely held businesses.

Nonetheless, the market for cryptocurrency assets continues to grow, new currencies are announced almost daily, and many UK investment banks are now getting involved. Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices, believes these markets need customized “indexing solutions.” He says, “[A]s cryptocurrency becomes more mainstream, investors now have access to reliable and transparent benchmarks backed by institutional quality pricing data.” Yes, but BVWire—UK assumes it will be some time before we see a digital index quoted in a valuation analysis submitted in support of a business dispute or fiscal matter.