Morgan Creek Digital, backed by the institutional investment house Morgan Creek Capital with $1.5 billion in assets under management , has launched a new Digital Asset Index Fund in partnership with Bitwise, Forbes reports August 28.

The new fund will give accredited investors, endowments, pensions and other approved institutional investors the possibility to gain indirect exposure to Bitcoin (BTC), Ethereum (ETH) and eight other large market cap assets, although notably not Ripple (XRP) and Stellar (XLM).

This is reportedly because assets such as Ripple and Stellar were created through a pre-mine – meaning that a proportion of the tokens were created and allocated to the project’s founders or developers before the token sale was made public. As Morgan Creek Digital partner Anthony Pompliano told Forbes:

“If there’s a central party that owns 30% or more of supply then we withhold those from the index, [b]ecause we think that introduces a lot of additional risk that may not be there if it was a more decentralized network.”

This also applies to tokens such as TRON (TRX), NEO and NEM, which could reportedly in future be excluded on the same grounds.

As Forbes notes, the centralization of some cryptocurrencies carries perceived regulatory risks associated with potentially heightened vulnerability to market manipulation on the part of large-percentage token holders. There is also the future possibility that regulators could classify such tokens as securities.

Pompliano told Forbes that he is confident institutional investors will be interested in the fund regardless of “whether [the assets are deemed] securities or not,” while Bitwise co-founder Hunter Horsley has reportedly confirmed that the decision to exclude pre-mined assets was based on concerns over potential fraud and manipulation, alongside the regulatory uncertainties surrounding the securities status of tokens with centralized ownership.

In addition to Bitcoin and Ethereum, Morgen Creek’s index includes Bitcoin Cash (BCH), EOS, Litecoin (LTC), Zcash (ZEC), Monero (XMR), DASH, Ethereum Classic (ETC) and Omisego. The assets will be held in the fund’s market-cap-weighted basket, to be recalculated monthly.

As of fall 2018, the fund will be overseen by Bitwise auditor Cohen & Company, with results published annually starting early 2019.

Alongside its restrictions on pre-mined coins, Morgan Creek is stipulating custody qualifications, trade concentration limits and cold storage requirements, which disqualifies several other cryptos from consideration for the new fund.

Neither IOTA nor Cardano (ADA) meet the cold-storage custody rule, while Vechain (VET) – which is reportedly traded largely on one exchange, Binance – doesn't pass the exchange concentration rule.

As Cointelegraph has reported, this spring government regulator Gary Gensler argued that altcoins such as Ethereum and Ripple could likely be considered unregistered securities based on their token pre-sales.

Developments since then have seen the U.S. Securities and Exchange Commission (SEC) rule that Ethereum has now been sufficiently horizontally established through mining to disqualify it from a securities classification. Ripple continues to face an ongoing lawsuit over its alleged sale of noncompliant securities.