Invest in Crypto through ETPs – Everything You Need to Know

Introduction to Exchange-Traded Products – A Simple Way to Invest in Crypto

Investing in crypto assets can be both complex and risky, especially when it comes to managing digital wallets and security aspects. This is where exchange-traded products (ETPs) come in as a solution. ETPs provide a regulated, secure, and straightforward way for investors to gain exposure to crypto without having to directly own the assets. For those interested in the crypto market and wanting to invest in crypto assets as easily as a stock, and integrate their crypto investments into their traditional portfolio, ETPs can offer an accessible and tax-efficient investment alternative that can be included alongside traditional investments.

What is an ETP and How Does it Work?

An exchange-traded product (ETP) is a publicly traded security that offers exposure to an underlying asset, such as stocks, commodities, and now also crypto assets. By investing in an ETP, you can mirror the price development of crypto assets, such as Bitcoin or Ethereum, without having to handle or store these crypto assets yourself.

ETPs are traded on regulated exchanges, which means trading takes place in a secure and monitored environment. This gives investors simpler access to crypto assets, often through capital insurances that offer tax-efficient solutions.

Different Types of ETPs

ETPs come in various forms depending on the underlying asset and the investor's goals. Here are some main types:

Index ETPs: Tracks a collection of assets, such as a crypto index that reflects the largest crypto assets on the market. This provides broader exposure and risk diversification.

Single Asset ETPs: Provides exposure to a single asset, such as Bitcoin or Ethereum, and is priced based on its market value. For some ETPs, Virtune offers staking, meaning that the underlying crypto assets generate rewards.

Physically Backed ETPs: Products where the underlying crypto asset is actually held by the ETP provider through a separate qualified custodian. This reduces credit risk for the investor, as the product is backed by real assets stored in secure custodians. All of Virtune's ETPs are physically backed, meaning Virtune handles both storage and security to protect your investment.

Synthetic ETPs: Creates exposure without holding the actual asset. These can use derivatives to mirror price movements. While synthetic ETPs can be flexible, they carry some credit risk as the investment relies on the issuer’s ability to pay rather than on the physical asset.

Benefits of Investing in ETPs

Simple and Secure Exposure: With ETPs, you don’t need to create your own crypto wallet and handle the complexity and risk involved in trading directly on crypto exchanges. Instead, Virtune handles the security and custody of the assets, making the investment process much easier and safer.

Tax Efficiency: Depending on the country, Virtune's ETPs can be traded through tax-advantaged accounts or insurance solutions tailored to local tax rules. In some countries, this means that investors are taxed on a fixed annual rate, rather than on capital gains for each transaction. This can offer benefits for investors looking to reduce their tax burden and simplify tax management.

Physically Backed Products for Increased Security: All of Virtune's ETPs are physically backed, meaning that the equivalent value of the underlying crypto assets is securely stored in cold storage at Virtune’s custodian. This means that the securities are backed by real assets, ensuring transparency and reducing credit risk against Virtune as the issuer.

How Are ETPs Priced?

The price of an ETP typically directly reflects the value of the underlying asset. For crypto assets, this means that the ETP price follows the value development of, for example, Bitcoin or Ethereum, where an ETP represents a certain amount of the underlying crypto asset. Virtune’s ETP prices are adjusted based on the market price of the underlying crypto asset, minus a management fee.

Staking Rewards: Increase Your Holdings with Staking

For some ETPs, Virtune offers staking, meaning that the underlying crypto assets generate rewards. Over time, this leads to an increase in the amount of crypto assets per ETP unit, thus adjusting the ETP price upwards, providing additional returns for the investor. Read more about Staking.

Why Virtune?

Virtune offers investors access to crypto through exchange-traded products that are traded on regulated exchanges. All of Virtune’s ETPs are 100% physically backed by the underlying crypto assets, meaning that the equivalent value of all outstanding securities is stored in the underlying crypto asset at our custodian in cold storage (offline). This reduces credit risk against Virtune as the issuer and is a safer alternative for investors compared to investing in tracker certificates that provide synthetic exposure and do not hold the underlying crypto assets as collateral.