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There are several ways to invest our money and cast our bread over many waters in the crypto space. An investor may decide to invest money directly by learning about the various cryptocurrencies and crypto assets that there are. He/she may also decide to invest via acclaimed experts by products, like exchange traded products.
ETPs, Exchange Traded Products, are investment vehicles (instruments) that track and calculatedly stash money on a particular security or securities (securities are financial instruments- shares or other money-making instruments like debentures, an index (an index is a basket of financial instruments) or other financial instruments. These products trade on exchanges (trade platforms).
An excellent example of an ETP is an Exchange Traded Fund. Bringing it down to the topic at hand, a crypto ETP is a crypto investment vehicle that invests in crypto securities and financial instruments that are crypto based.
Crypto ETPs expose investors to the crypto market without the hassles that may come with owning the underlying crypto. Institutions hold these crypto securities on behalf of investors. What investors then have are conventional brokerage accounts and hopefully transparent trading. One benefit of investing in cryptos via ETFs is that stakeholders get to short sell equities once they forecast that the underlying asset may tank in the near future.
What is a Crypto ETF?
An Exchange Traded Fund is an investment vehicle that tracks specific assets and securities or a group of assets. If all you are interested in is basically scooping gains and limiting losses and you do not want to go through the hassles of actually owning a crypto, you may decide to invest in cryptos via a middleman. An Exchange Traded Fund allows you to easily diversify your assets in the sense that these registered and highly regulated funds use your monies and other investors’ monies to invest in larger baskets of investment options- this time cryptocurrencies.
A bitcoin ETF is one that mimics the price of the most popular digital currency in the world. This allows investors to buy into the ETF without going through the complicated process of trading bitcoin itself. Because stakeholders of the ETF won’t be directly invested in bitcoin itself, they will not have to worry about the complex storage and security procedures required of cryptocurrency investors.
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Crypto ETPs study many cryptos and invest based on the trends traced. The ETPs are usually tangibly based on the cryptocurrencies and not the fiat equivalent of the crypto. This simply means that they entitle stakeholders to the very crypto that the fund tracks and invests in.
Investors should note that Crypto funds and ETPs are subject to the regulations of the Security and Exchange Commission or Agency of the country or area.
The following are examples of Crypto ETPs that investors may look into:
- Amplify Transformational Data Sharing ETF
- Capital Link Global Fintech Leaders ETF
- VanEck Vectors Digital Transformation ETF
Many African crypto investors are currently working on blockchain and crypto based products. Recently, popular artiste, Davido, who is an American/Nigerian singer, revealed via Twitter on the 2nd of February 2021, that he was set to commence a Bitcoin trading entity.
The crypto trading outfit will run the business of “speculating the movement of BTC prices, purchasing BTC at choice periods and trading it off for solid gains also at “choice” periods.”
This outfit is yet to see the light of the day because of the recent crypto dis-enabling trends in Nigeria.
Conclusion
Investors may decide to engage the services of crypto trading companies, like the crypto trading entity as proposed by the popular artiste. This way, they open accounts with the company and have third parties make money on their behalf.
The smart investor may decide to explore this option of Establishing Crypto ETFs, especially in Africa where there is currently a dearth of Crypto ETFs.
Please take note this piece is merely for informational purposes alone and not construed as business or investment advice. Please conduct your due diligence before the execution of any decision based on this article.
The Author is a transactional legal practitioner in the Tech space. She will be glad to answer your questions and know your experience via the comment section below.
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Originally published on CryptoCurrency Academy.
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