Are crypto ETPs right for you?

Who are crypto ETPs designed for?

Exchange-Traded Products (ETPs) can be convenient, cost-efficient solutions for investors looking to access crypto within a regulated framework. But are they the right choice for you? This depends on your investment goals, technical comfort level, and risk appetite.

ETPs can make it as straightforward to invest in cryptocurrencies as it is to invest in regular stocks or ETFs, using the investment channels you're already familiar with—such as stock brokerage apps and traditional investment platforms.

ETPs vs direct ownership: a comparison

Crypto ETPs offer:

• Security: Institutional-grade custody solutions are designed to safeguard underlying assets, reducing risk of loss from hacks, unauthorised access, or operational errors.

• Regulatory compliance: Supervised by financial authorities, adhering to reporting requirements and legal standards.

• Ease of access: Buy through your usual broker, seamlessly add to your existing portfolio, trade on regulated exchanges.

• Liquidity: Easy to buy and sell like stocks—you are less likely to get stuck with an investment you can't convert to cash.

• Simplified tax reporting: ETPs are treated as securities, fitting into traditional tax systems more seamlessly than direct crypto transactions.

Direct Ownership offers:

• Full control: You hold the private keys and have complete custody of your assets.

• DeFi participation: Direct access to decentralised finance protocols, lending, and yield farming.

• No management fees: Though you may face exchange fees, network fees, and wallet costs.

• Privacy: Greater anonymity in transactions.

When ETPs make sense

Consider crypto ETPs if you:

• Prefer simplicity: You want crypto exposure without learning wallet management, private key security, or navigating crypto exchanges.

• Value regulatory protection: You want investments supervised by financial authorities with clear legal frameworks.

• Seek portfolio integration: You want crypto alongside traditional investments in one brokerage account.

• Have institutional requirements: Professional investors, family offices, or pension funds often require regulated investment vehicles.

• Prioritise security: You're concerned about the risks of self-custody—lost keys, hacks, or user mistakes.

• Want tax-efficient wrappers: In some jurisdictions, ETPs can be held in tax-advantaged accounts, subject to eligibility rules.

When direct ownership may be better

Direct crypto ownership might suit you better if you:

• Are technically comfortable: You understand wallet security, private keys, and blockchain transactions.

• Want DeFi access: You plan to use your crypto for lending, staking directly, or participating in decentralised protocols.

• Trade actively: High-frequency trading on crypto exchanges may be more cost-effective than repeated ETP transactions.

• Value maximum control: "Not your keys, not your coins"—you want full custody and independence.

Security considerations

Holding crypto directly means you are responsible for keeping it safe. This involves storing it in a digital wallet and safeguarding private keys. If you lose your keys—or if they're stolen—your crypto is gone permanently.

Risks of self-custody include:

• Hacks and scams: Phishing emails, fake apps, and malicious links can compromise your wallet.

• User mistakes: Sending funds to the wrong address or losing your password means permanent loss.

• Technical complexity: Setting up secure storage can be intimidating for beginners.

ETPs help mitigate these concerns. CoinShares Physical ETPs are 100% backed by actual cryptocurrency, securely held by Komainu—a regulated custodian created by CoinShares, Nomura, and Ledger, designed to meet institutional-grade security standards.

Cost considerations

Compare total costs:

ETP costs:

• Management fees (varying by product; some CoinShares ETPs have 0% fees)

• Brokerage transaction fees

• Bid-ask spread when trading

Direct ownership costs:

• Exchange trading fees

• Network transaction fees

• Hardware wallet purchase (for secure storage)

• Time spent on security and management

Questions to ask yourself

Use this framework to decide:

• How comfortable am I with blockchain technology and wallet management?

• Do I need my crypto holdings alongside my traditional investments?

• Am I planning to actively trade or hold for the long term?

• Do I want to participate in DeFi protocols?

• How important is regulatory protection to me?

• What are my tax reporting requirements?

CoinShares ETP range

CoinShares offers a range of physically-backed ETPs:

• Single-asset ETPs: Bitcoin, Ethereum, Solana, XRP, and more.

• Staking ETPs: Earn staking rewards with 0% management fees on products like Ethereum Staking ETP.

• Index ETPs: Diversified exposure to top cryptocurrencies in a single product.

All CoinShares Physical ETPs are 100% backed by actual cryptocurrency, with reserves publicly available and independently verified by The Network Firm.

Key takeaways

• ETPs may suit investors seeking simplicity, security, and regulatory compliance.

• Direct ownership suits technically comfortable investors wanting full control or DeFi access.

• Security is a key differentiator—ETPs reduce self-custody risks.

• Consider your investment goals, technical comfort, and tax situation when deciding.

• CoinShares provides a range of physically-backed ETPs with institutional-grade security.