Crypto ETPs with Style
In this article, crypto ETPs are presented as an alternative trading option for crypto assets. Despite higher trading costs, investing in crypto ETPs that follow a strategy (or "style") can be economically sensible for individual investors.
How Can Cryptos Be Traded (CEX, DEX, ETPs)
Typically, investors buy and sell on user-friendly centralized crypto exchanges like BISON or Binance. More advanced investors also have the option to conduct their crypto transactions through decentralized crypto exchanges (DEXs) like UniSwap or SushiSwap. Crypto ETPs (Exchange-Traded Products) offer another way to trade cryptos on an exchange, conducted through traditional brokers like ING or Sparkasse at traditional trading venues like XETRA or the Börse Stuttgart.
The following table compares the different ways to trade cryptos.
| Criterion | CEX (Centralized Exchanges) | DEX (Decentralized Exchanges) | ETP (Exchange Traded Products) |
|---|---|---|---|
| Transaction Costs | low | low to high | low |
| Management Fees | None | None | annual fees, depending on the product type |
| Liquidity | high | low to high | low to high |
| Anonymity | KYC required, no anonymity | possible without KYC, higher anonymity | KYC required, no anonymity |
| Regulation/Investor Protection | medium to high | low | high |
| Accessibility | Easy through user-friendly platforms | Requires technical understanding of wallets and blockchain interactions | Easy through traditional brokers and banks |
| Issuer Risk | medium | no issuer risk | medium |
| Taxes (DE-Investor) | Income tax (< 1 year), tax-free (> 1 year) | Income tax (< 1 year), tax-free (> 1 year) | Depending on the product type, income tax (< 1 year), tax-free (> 1 year) or capital gains tax |
| Term | until business discontinuation | none | until business discontinuation |
Trading Costs
A significant difference of ETPs compared to alternatives are the annual management fees. For example, an investor buys Bitcoin worth €10,000 through a crypto ETP (e.g., ETC Group Physical Bitcoin (DE000A27Z304), 2% management fees p.a., broker Comdirect (€4.90 + 0.25% of the transaction volume, min. €9.90, max. €59.90)) and through a CEX (BSDEX, approx. 0.35% of the transaction volume). Within a year, the value of the investment rises to €20,000 and is sold. The following costs arise:
| BSDEX (CEX) | Comdirect/ETC Group (ETP) | |
|---|---|---|
| Transaction Costs (€) | €35.00 + €70.00 | €25.00 + €50.00 |
| Management Fees (€) | €0.00 | €300 (=€30,000 / 2 x 0.02) |
| Total (€) | €105.00 | €375.00 |
Management fees can significantly increase the costs of a Bitcoin investment.
When Does Investing in Cryptos via ETPs Make Sense?
Investing in a single crypto asset through a crypto ETP makes little sense, as shown in the example above. However, multi-asset crypto ETPs that invest in more than one crypto asset actually have several advantages that can justify the management fees:
- Multi-Asset Crypto ETPs Invest with a Strategy (or "Style"). For example, the goal may be to invest in the market (diversification) or a market-neutral factor (e.g., momentum). This is not possible for private investors without a crypto ETP, unless they implement a strategy requiring regular rebalancing themselves.
- Tax Advantage. Physically replicating crypto ETPs with a physical delivery option of the underlying asset are considered direct investments in cryptos and are tax-free after one year. If a private investor sells crypto assets before the one-year threshold while implementing their own strategy for rebalancing, gains must be taxed. This does not apply to rebalancing through crypto ETPs.
Multi-Asset Crypto ETPs
Requirements
The following table lists all multi-asset crypto ETPs that meet the following conditions:
- No leveraged or short ETPs
- No copy or social trading products (Wikifolio or Instifolio)
- Products that are available for private investors in Germany
- Physically replicating
- Unlimited duration (or long duration)
- No performance fees ("High Watermark")
- No hybrid products like cryptos + gold or cryptos + stocks
- Products with and without physical delivery option
Results
As of June 22, 2024
For each multi-asset crypto ETP, the strategy, issuer, ISIN, annual management fees, currency, delivery option, and the product page of the issuer are provided. The following strategies are observed:
- Diversification: Investing in a selection of cryptos, aiming to hold a diversified market portfolio.
- Factor: Investing in a selection of cryptos, aiming to maintain a market-neutral portfolio. The most common factor is momentum."
1Valour STOXX Bitcoin Suisse Digital Asset Blue Chip
- Strategy: Diversification
- Issuer: Valour
- ISIN: GB00BPDX1969
- Management Fees p.a. (in %): 1,9
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Bitcoin Suisse ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH0496484640
- Management Fees p.a. (in %): 2,5
- Currency: CHF
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Crypto Basket 10 ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH1135202179
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Crypto Basket Equal Weight ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH1135202161
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Crypto Basket Index ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH0445689208
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Crypto Mid-Cap Index ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH1130675676
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
21Shares Staking Basket Index ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH1210548892
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
AMINA Crypto Asset Select Index (AMINAX)
- Strategy: Diversification
- Issuer: AMINA
- ISIN: CH0568452707
- Management Fees p.a. (in %): 1,5
- Currency: USD (EUR, CHF)
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
AMINA Metaverse Index Tracker (AMETA)
- Strategy: Diversification
- Issuer: AMINA
- ISIN: CH1181262853
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
CF Crypto Momentum ETP
- Strategy: Factor
- Issuer: Crypto Finance/issuance.swiss
- ISIN: CH1263519394
- Management Fees p.a. (in %): 1,59
- Currency: USD
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
CF Crypto Web 3.0 ETP
- Strategy: Diversification
- Issuer: Crypto Finance/issuance.swiss
- ISIN: CH1263519386
- Management Fees p.a. (in %): 1,59
- Currency: USD
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
CoinShares Physical Smart Contract Platform ETP
- Strategy: Diversification
- Issuer: CoinShares
- ISIN: JE00BPRDNM93
- Management Fees p.a. (in %): Currently 0 (otherwise 1,00)
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
CoinShares Physical Top 10 Crypto Market ETP
- Strategy: Diversification
- Issuer: CoinShares
- ISIN: JE00BPRDNL86
- Management Fees p.a. (in %): Currently 0 (otherwise 1,00)
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
ETC Group MSCI Digital Assets Select 20
- Strategy: Diversification
- Issuer: ETC Group
- ISIN: DE000A3G3ZL3
- Management Fees p.a. (in %): 1,49
- Currency: EUR
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
Hashdex Crypto Momentum Factor ETP
- Strategy: Factor
- Issuer: Hashdex
- ISIN: CH1218734544
- Management Fees p.a. (in %): Currently 0 (otherwise 1,49)
- Currency: USD
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
Hashdex Nasdaq Crypto Index Europe ETP
- Strategy: Diversification
- Issuer: Hashdex
- ISIN: CH1184151731
- Management Fees p.a. (in %): Currently 0 (otherwise 1,49)
- Currency: USD
- Delivery Option: No
- Issuer Product Page (opens in a new tab)
DDA Bitcoin Macro ETP
- Strategy: Factor
- Issuer: DDA
- ISIN: DE000A3G9SE0
- Management Fees p.a. (in %): 2
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
DDA Crypto Select 10 ETP
- Strategy: Diversification
- Issuer: DDA
- ISIN: DE000A3G3ZD0
- Management Fees p.a. (in %): 1,69
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
Sygnum Platform Winners Index ETP
- Strategy: Diversification
- Issuer: 21shares
- ISIN: CH0508793459
- Management Fees p.a. (in %): 2,5
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
VanEck Crypto Leaders ETN
- Strategy: Diversification
- Issuer: VanEck
- ISIN: DE000A3GWEU3
- Management Fees p.a. (in %): 1,5
- Currency: USD
- Delivery Option: Yes
- Laufzeit: Begrenzt mit Verlängerungsoption
- Issuer Product Page (opens in a new tab)
VanEck Smart Contract Leaders ETN
- Strategy: Diversification
- Issuer: VanEck
- ISIN: DE000A3GXNT4
- Management Fees p.a. (in %): 1,5
- Currency: USD
- Delivery Option: Yes
- Laufzeit: Begrenzt mit Verlängerungsoption
- Issuer Product Page (opens in a new tab)
WisdomTree Physical Crypto Altcoins
- Strategy: Diversification
- Issuer: WisdomTree
- ISIN: GB00BMTP1519
- Management Fees p.a. (in %): 0,7
- Currency: USD
- Delivery Option: Yes
- Issuer Product Page (opens in a new tab)
WisdomTree Physical Crypto Market
- Strategy: Diversification
- Issuer: WisdomTree
- ISIN: GB00BMTP1626
- Management Fees p.a. (in %): 0,7
- Currency: USD
- Delivery Option: Currently not
- Issuer Product Page (opens in a new tab)
WisdomTree Physical Crypto Mega Cap Equal Weight
- Strategy: Diversification
- Issuer: WisdomTree
- ISIN: GB00BMTP1733
- Management Fees p.a. (in %): 0,4
- Currency: USD
- Delivery Option: Currently not
- Issuer Product Page (opens in a new tab)
Next Steps
In my next article, I will write about my economic analysis of the return-risk profiles, liquidity, and issuer risk of multi-asset crypto ETPs.
Disclaimer
All content displayed on the website is for informational purposes only and does not constitute a recommendation to buy or sell. They are not to be understood explicitly or implicitly as a guarantee of a specific price development of the mentioned financial instruments or as a call to action. The acquisition of securities or cryptocurrencies involves risks that can lead to the total loss of the capital invested. The information does not replace professional investment advice tailored to individual needs. No liability or guarantee is assumed for the timeliness, accuracy, appropriateness, and completeness of the information provided, nor for financial losses.