The Genesis Of Cryptocurrency Exchange
While investors wait for a spot BitcoinETF (exchange-traded fund) in the United States, many investors may not realize that there are already dozens of crypto exchange-traded products (ETPs) available around the world. For those of you unfamiliar with the term, an ETP can be thought of as a wrapper around an asset or group of assets such as Bitcoin and cryptocurrencies that are traded on an exchange like a security. Common exchanges where crypto ETPs can be found include OTCQX by OTC Markets, Nasdaq Nordic, CME GroupCME 0.0% (for crypto futures and options), Deutsche Börse's Xetra, the Swiss SIX Exchange, and Canada's Toronto Stock Exchange. ETP, ETF, CEF - what does it all mean? Unsurprisingly, there is still a lot of confusion surrounding ETPs, especially when it comes to cryptocurrencies. This knowledge gap can be limiting for people looking for ways to gain exposure to cryptocurrencies without directly holding the asset. The above acronyms are usually used interchangeably, but each has its own distinct meaning and there are important differences in terms of tax treatment, credit risk, ease of trading and rules governing deposits/redemptions that you should be aware of. PROMOTED For starters, ETP is a universal term. Any acronym like ETF or CEF (closed-end fund) falls under the ETP family. Similarities between these products include that: Trade the stock markets during the day Have an underlying basket of investments with net asset value They are operated by a professional team Have cost ratios/fee schedules It can offer distributions of income and capital gains to investors Even so, there are a number of significant differences. For example, due to their unique structures, ETF prices trade at or near their net asset value (NAV), while CEF share prices may trade at a significant premium or discount to the fund's NAV. This is something we've seen quite often with grayscale products (see chart). MORE ADVISORS FROMFORBES The best travel insurance companies By Amy Danise Editor The best travel insurance plans for Covid-19 By Amy Danise Editor General Terms and Conditions discount table VOPYCHARTER DISCOUNT Crypto Confidential: Forbes' definitive guide to crypto and blockchain, delivered to your inbox every Saturday. Email address Log in By registering, you accept and agree to our Terms of Service (including class action and arbitration waivers) and Privacy Statement. In addition, some ETPs may be restricted to certain classes of investors, such as those with large amounts of assets. For example, only accredited investors may purchase shares of Grayscale products directly from the issuer. On the other hand, ETFs and Greyscale funds traded in the secondary market are open to retail traders. What crypto ETPs are available? Among all of Grayscale's products, the firm's bitcoin trust is by far the largest fund in the industry available to investors, with $14.05 billion in AUM (assets under management) at the time of writing. It also offers other similarly structured products tracking other assets such as ethereum, litecoin, ethereum classic and even a diversified index. However, the crypto ETP market is much more than shades of gray. For example, Switzerland's SIX Swiss Exchange has a robust list of crypto ETPs exceeding 40 tickers, the largest by trading volume being WisdomTree BitcoinBTC 0.0% (BTCW.SW) and 21Shares Ethereum ETH 0.0% ETP (AETH.SW). The Canadian Toronto Stock Exchange launched the first North American crypto ETFs in the first quarter of 2021: Purpose Bitcoin ETF (BTCC) – which got off to a very strong start raising nearly $1 billion in the first month – Evolve Bitcoin ETF (EBIT) and CI Galaxy Bitcoin ETF (BTCX). In addition, in October 2021, the first Bitcoin ETFs were launched in the US. However, they do not reflect the spot price of Bitcoin, but futures contracts that are traded on platforms such as the Chicago Mercantile Exchange. The ProShares Bitcoin ETF (BITO) was the first to launch in October. However, other offerings include the Valkyrie Bitcoin Strategy ETF (BTF) and the VanEck Bitcoin Strategy ETF (XBTF). Crypto Exchange Product Chart Crypto Exchange FORBES Product Chart How to break into the crypto ETP market? In most cases, the solution is as simple as having an account with a brokerage firm with access to foreign exchanges that trade crypto ETPs or OTC Markets. Additionally, qualified investors have several additional investment options as certain ETNs may only be offered to this more sophisticated audience. Forbes is a bona fide news publication, not an investment adviser, registered broker-dealer or stock exchange, and nothing in this publication should be construed as investment advice, research or investment advisory services. The Forbes website is not tailored to the current or future investment portfolio, investment objectives or other needs of a particular reader or potential reader. The content presented in this publication is for informational purposes only. No part of this publication should be construed as a solicitation, offer, opinion, endorsement or recommendation by Forbes to buy or sell any security, investment, cryptocurrency or digital commodity or asset in the metaverse. You should consult your legal and tax advisors before making any financial decisions.
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