Digital assets can pose a headache for analysts, investors and information providers—and it’s not the volatility that’s traditionally associated with this asset class.

With few barriers to entry and little consistency in how tokens are selected or classified, the market can feel fragmented and unpredictable.

This is where the organisational and governance structures of a specialist index firm come in, says Kristen Barrie Mierzwa, head of digital assets at FTSE Russell and a recent guest on the Index Ideas podcast.

In the podcast, Barrie Mierzwa talks about the unique challenges of indexing digital assets: defining the universe, sourcing reliable information on cryptocurrency tokens and applying an index framework to a market that operates non-stop.

As there are few barriers to entry for those launching digital tokens, how does FTSE Russell decide which ones it admits to its digital asset index universe?

“Centralised exchanges are our first line of defence as they've done a lot of vetting in order to allow an asset to be on their platform,” says Barrie Mierzwa.

“And FTSE Russell wants at least three sources for pricing data before we'll allow an asset into our universe,” she goes on.

“So that means it needs to be listed on three of those centralised exchanges in one of the 11 trading pairs that we have. And we're trying to make sure we're capturing the price and volume data that's really representing the best of the best in terms of who's trading on these platforms,” Barrie Mierzwa says in the podcast.

Currently, FTSE Russell admits around 500 assets to its index universe, compared to a possible starting universe of at least hundreds of thousands of tokens—it’s hard to define the scope of the market exactly.

And as there’s no concept of a market close in cryptocurrency, how do we calculate indices? And how do index changes like rebalancing or corporate actions take place?

“We calculate a 15-second price 24/7 for all those assets,” says Barrie Mierzwa.

“And then we also offer multiple reference prices that we fix once an hour, again 24/7,” she says.

“Digital assets don't have corporate actions, the way we think of corporate actions in the equity world where something's going to happen—like we're going to have a split and it's going to get announced, and everybody knows the effective date,” Barrie Mierzwa goes on.

“In the digital asset world, things often happen at a certain block time. So whenever block 1562 happens, for example, that's when this thing is going to happen.”

“You don't know what time of day that could be. It just depends. So you must watch it. And it's interesting getting information from non-traditional sources: it may be on X, it may be on a discord channel, or it might be on the foundation of the protocol's website.”

“It's been a fun challenge pulling together multiple sources so that we can correctly reflect if there's any changes to a protocol in our indices in the correct, timely manner that our clients would expect,” she says in the podcast.

Recording digital asset prices in FTSE Russell indices also requires good coverage of the stablecoin market, says Barrie Mierzwa, given that most digital assets use stablecoins as their unit of account.

“Right now, FTSE Russell calculates 12 different stablecoin prices every 15 seconds. What's interesting is that I think people think – ‘oh, stablecoins, they must trade at one because that's their purpose’.”

“But in the secondary market, stablecoins never trade at one. So, if you're doing some sort of smart contract with instantaneous settlement, you're going to want to know what that stablecoin rate is. And we have that data.”

“So I'm very, very excited to be participating in the new world that's coming. And I think a lot of that will be through our stablecoin offering,” says Barrie Mierzwa.