Crypto ETPs ‘six times more expensive’ than ordinary custodial services

Research company Finoa discovered it is cheaper for big investors to hold cryptocurrencies

German custody firm Finoa has revealed that crypto exchange-traded products (ETPs) are four to six times as expensive as ordinary custodial services.

The company discovered that single-asset ETPs had an average fee of 1.8% and multi-asset ETPs had an average (mean) fee of 2.3%.

The term ETP is used for actively-managed ‘Exchange Traded Products’ featuring cryptocurrencies as the underlying asset class.

The investment product allows retail and institutional investors in designated countries to be enabled to invest in digital assets as safely and easily as buying ordinary shares.

Crypto ETP 4.6 times as expensive as the use of a custodian

According to Finoa, this means a single asset crypto ETP on average is 4.6 times as expensive as the use of a custodian, and a multi-asset ETP is six times as expensive.

Crypto ETPs give investors the ability to access the upside of the underlying assets without having to deal with the crypto itself.

Christopher May, the co-founder and CEO of Finoa, recently said that early institutional adopters had a risk profile that made them open to this new type of asset and included a full portfolio of funds, “such as hedge funds, venture capital funds and dedicated crypto funds”.

He added the alternative institutional investors were unintimidated by the lack of infrastructure as well as the minimal regulation surrounding the buying, selling and storing of digital assets.

Wilhelm Nöffke – senior compliance manager of Finoa – also explained that traditional forms of regulation from the fiat world “do not reciprocally apply to every aspect of crypto nor to the fundamental nature of blockchain technology”.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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