You are right. Crypto tokens will be generated as the "Fund Holding Certificate" which is a generic term used in the prototype baseline design doc. The FHC could be just a string of characters. But by making it into a token, it can be transferable on a blockchain, fungible, and tradeable. Beyond the MVP it can be redeemed for or created wiith a basket of underlying assets in an exchange like ETF shares.
Indicium will be a cryptofund platform administering technically unlimited number of index funds. Covering the crypto market cap is a minimum requirement although keep it in mind that cryptos are issued at will so in principle an algorithmic index fund won't be able to instantly capture all actions of the market cap defined in traditional sense. For example if a coin worth $1 with no liquidity issues 10 trillion new tokens, a global market cap index will go through the roof but no fund will be able to track the change,