Wednesday, June 18, 2025
  • About us
  • Economic Calendar
  • Price Predictions
  • Coins Alerts
  • Crypto Portfolio Tracker
  • Exclusively from Our Partners
Cryptheory
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
        • Binance Futures Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions
No Result
View All Result
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
        • Binance Futures Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions
No Result
View All Result
Cryptheory
No Result
View All Result

How ETPs work and that’s why they’re so successful

by cryptheory
March 28, 2025
in Guides
Reading Time: 4 mins read

Table of Contents

  • What are ETPs?
  • Physical ETPs: the benefits
  • Why are crypto ETPs becoming more popular
  • Tax Benefits of ETPs
  • ETPs and exchanges compared

Many investors still believe that they have to go to a crypto exchange to purchase Bitcoin and other altcoins. However, not everyone wants or is allowed to go this route. Finally, stock market crashes like FTX’s have shaken confidence in exchange service providers. Many investors and in particular institutional investors also prefer regulated products that they can book into their securities account at the bank. However, storing tokens in wallets is not an option for many investors. This is exactly where Exchange Traded Products, ETPs for short, with cryptocurrencies as an underlying can help.

What are ETPs?

ETPs are regulated, traditional financial products that give investors exposure to a variety of assets, including stocks, bonds, commodities and even cryptocurrencies. Like stocks, ETPs are bought and sold on regulated exchanges or through brokers.

While there are thousands of ETPs for traditional assets, the European market counts over 166 ETPs tracking cryptocurrencies. These products allow investors to gain exposure to a single cryptocurrency, such as Bitcoin or Ethereum, or to track an index of cryptocurrencies. Investors can thus decide whether to purchase a single cryptocurrency using an ETP or several directly in order to invest diversified in the crypto market.

The first crypto ETP in Europe was launched in 2015 by XBT Provider by CoinShares. The inflow of funds also shows that the demand for these crypto ETPs is high. CoinShares, for example, now has around three billion US dollars in assets under management.

ETPs can be structured in two ways: physical or synthetic. Physical ETPs own the underlying asset, while synthetic ETPs use derivatives to track the asset’s price.

Physical ETPs: the benefits

Unlike synthetic ETPs, physical ETPs hold the underlying asset, so price deviations cannot occur. Whatever the asset, the physical ETP as a security is designed to accurately track the performance of, for example, cryptocurrencies, stocks or precious metals. Investors do not take the risk that their physical ETP will deviate from the price development of the underlying asset.

Just as gold is held in vaults for the client in physically backed ETPs, cryptocurrencies such as bitcoin are held in high-security wallets with independent custodians for the client. There is no issuer risk for the investor. The deposits of the physical ETPs are kept separate from the assets of the company and cannot fall into the bankruptcy estate.

Why are crypto ETPs becoming more popular

One of the reasons crypto ETPs are growing in popularity is that they offer investors an easy and accessible way to invest in a variety of assets, including cryptocurrencies. ETPs can be bought and sold on traditional exchanges, making them more accessible to investors who don’t have access to a crypto wallet. This also explains why a report by Bloomberg Intelligence predicts that the market size of crypto ETPs will grow to over $120 billion by 2028.

In addition to the simple and familiar handling – buying and selling works in the same way as with shares, funds or bonds – the big advantage of ETPs over crypto exchanges lies in the regulation. ETP issuers are required to adhere to strict rules and regulations, providing investors with additional security and protection. On the other hand, there are crypto exchanges, which in the past have often attracted negative attention due to mismanagement and hacks due to a lack of regulation and security standards.

Tax Benefits of ETPs

Taxes are an important part of investing. The flexible design of ETPs can result in tax advantages compared to the direct purchase of Bitcoin and Co. on a crypto exchange. Private individuals who sell cryptocurrencies during the year must tax them at their income tax rate. For the vast majority of investors, this is higher than the capital gains tax. If, on the other hand, you acquire crypto ETPs, these fall under the often more attractive capital gains tax as a bond.

ETPs and exchanges compared

To make it easier for investors to compare ETPs and exchanges, the following table shows the main differences:

aspect Crypto ETP crypto exchanges
ease of use Traded on traditional exchanges. Available through brokers and investment platforms. Easy diversification via crypto baskets possible. You have to be able to manage a wallet and deal with the functionalities of the exchange. Difficult to diversify as individual cryptocurrencies have to be bought manually.
regulation ETP issuers must adhere to strict rules and regulations. Regulation only exists to a limited extent, depending on the jurisdiction. Crypto exchanges are often like a black box for investors.
Security ETPs offer investors additional security and protection, for example by making them less vulnerable to hacks. There have often been hacks in which customer deposits have been stolen. There are also many cases of fraud in which customer funds have been embezzled.
Selection Can map various asset classes from stocks to cryptocurrencies in a wide variety of forms, such as a crypto basket. Mainly only cryptocurrencies are offered.

The criteria listed give a first impression of why the trading volume and selection of crypto ETPs has increased in recent years. The development has only just begun. More and more new ETPs are coming onto the market, offering investors tailored investment strategies to participate in the upswing of the crypto economy.

  • Author
  • Recent Posts
cryptheory
cryptheory
Core team behind Cryptheory Labs and website Cryptheory.org.
cryptheory
Latest posts by cryptheory (see all)
  • Why Online Advertisers Should Request Website Traffic Data from Google Analytics Instead of Using SEO Tools Like MOZ or Ahrefs? - March 24, 2025
  • North Carolina’s Bold Move: State Bill Proposes Investing 10% of Public Funds in Bitcoin - March 22, 2025
  • Justin Sun Stakes $100 Million in Ethereum on Lido – What Does It Mean for the Market? - March 19, 2025
Previous Post

Bitcoin becomes a political issue in USA

Next Post

Could This Be The Solution To Bitcoin’s NFT Problem?

Related Posts

How to Trade Meme Coins in 2025: A No-BS Guide for Degens and Smart Investors Alike
Guides

How to Trade Meme Coins in 2025: A No-BS Guide for Degens and Smart Investors Alike

June 9, 2025
Top P2E Erotic Games Where You Don’t Just Play… You Earn (and Maybe Break a Sweat Too)
Gaming

Top P2E Erotic Games Where You Don’t Just Play… You Earn (and Maybe Break a Sweat Too)

May 12, 2025
How to Start Trading Crypto Without Screwing Yourself Over: A Beginner’s Guide
Guides

How to Start Trading Crypto Without Screwing Yourself Over: A Beginner’s Guide

May 1, 2025
Where Can You Pay With Crypto? Best Vacation Destinations for 2025
Guides

Where Can You Pay With Crypto? Best Vacation Destinations for 2025

April 28, 2025
How to Store and Use Crypto During the Apocalypse: The Ultimate Survival Guide for the Digital Age
Guides

How to Store and Use Crypto During the Apocalypse: The Ultimate Survival Guide for the Digital Age

April 22, 2025
What is Ethereum Virtual Machine (EVM): Heart of Ethereum
Attractions

What is Ethereum Virtual Machine (EVM): Heart of Ethereum

April 15, 2025
What Is the Chaikin Money Flow (CMF) Indicator and Why Should You Watch It
Guides

What Is the Chaikin Money Flow (CMF) Indicator and Why Should You Watch It

April 7, 2025
How to Spot the First Signs of a Recession: A Guide for Every Investor
Attractions

How to Spot the First Signs of a Recession: A Guide for Every Investor

April 4, 2025
on-chain data providers glassnode
Guides

Best On-Chain Data Providers: Who Rules Blockchain Analytics?

March 11, 2025
Track all markets on TradingView
Score: 0
Game Over

Popular

SOL's Big F***ing Breakout: Why Solana's About to Send You to the Moon

SOL’s Big F***ing Breakout: Why Solana’s About to Send You to the Moon

June 10, 2025
Who Really Makes Bank on Memecoins – And Why It Ain't You, You Beautiful Degenerate

Who Really Makes Bank on Memecoins – And Why It Ain’t You, You Beautiful Degenerate

June 4, 2025
June 15th: The Altcoin Apocalypse or Your Ticket to a Lambo? Let's F***ing See.

June 15th: The Altcoin Apocalypse or Your Ticket to a Lambo? Let’s F***ing See.

June 11, 2025
Crypto Trading Tips for June 5, 2025: Navigating the Binance Spot Market

Crypto Trading Tips for June 5, 2025: Navigating the Binance Spot Market

June 5, 2025
Bitcoin Price Analysis & Trading Tips – June 9, 2025

Bitcoin Price Analysis & Trading Tips – June 9, 2025

June 9, 2025
Solana On-Chain Frenzy: New Addresses, Spikes, and Degens Running Wild

Solana On-Chain Frenzy: New Addresses, Spikes, and Degens Running Wild

June 12, 2025
Analysis & Trading Tips June 10, 2025: Dogecoin Is Barking Again

Analysis & Trading Tips June 10, 2025: Dogecoin Is Barking Again

June 10, 2025
Dogecoin's Wild Ride: A Charts-and-Giggles Exposé on Who Really Got Rekt (It Was Probably You)

Dogecoin’s Wild Ride: A Charts-and-Giggles Exposé on Who Really Got Rekt (It Was Probably You)

June 6, 2025
Staking: Is it Just a Fancy Ponzi Scheme? Let's Get Real.

Staking: Is it Just a Fancy Ponzi Scheme? Let’s Get Real.

June 11, 2025
The Hottest Female Characters in PC Games: A Deep Dive into Digital Desirability

The Hottest Female Characters in PC Games: A Deep Dive into Digital Desirability

June 5, 2025

⭐ What Type of Crypto Investor Are You? (v2)

1. How do you DYOR (Do Your Own Research)?

2. Your first reaction to a 10x pump?

3. What’s your opinion on memecoins?

4. Where do you stake your crypto?

5. What’s your exit strategy?

6. How do you pick your next investment?

7. Favorite kind of airdrop?

8. What’s your approach to NFTs?

9. How do you store your crypto?

10. What's your long-term crypto goal?

Crypto News

Bitcoin

Ethereum

Altcoins

Cryptocurrency

Platforms for Copy Trading

Platforms for Grid Trading

Glossary of trading and crypto terms

Crypto Portfolio Tracker

 

Cryptheory Labs Projects

Guest Post for Free

On our website, you can share your opinions and insights. This feature is reserved for non-promotional articles. We are already working on a system for donations and rewarding every author.

This website is here for those of you who want to be at the forefront of innovation and new technologies like Bitcoin. But first, we need to tackle the challenges and survive in the unforgiving world of crypto assets. THIS IS CRYPTHEORY!

Follow Us

  • Terms Of Use
  • Privacy Policy
  • About us
  • Contact us

© 2024 Cryptheory - F**k the forex, we want gains!

Shiba Inu loading
No Result
View All Result
  • Cryptocurrency List
  • Cryptocurrency
    • Cryptocurrency Exchanges
      • Top exchanges for trading Bitcoin derivatives
      • How to buy bitcoin without KYC
      • How to Trade Bitcoin – best platforms
      • Best platforms to buy Bitcoin by debit or credit card
      • Platforms for Grid Trading
      • BYDFi: Review and Guide
      • BingX: Review and Guide
      • Kraken: Review and Guide
      • Bybit: Review and Guide
      • Bitpanda: Review and Guide
      • Phemex: Review and Guide
      • Huobi: Quick Guide
      • Binance: Review and Guide
    • Bitcoin
    • Tether
    • XRP
    • Dogecoin
    • Avalanche
    • Stellar
    • The Open Network
  • crypto news
  • Crypto Exchanges Info
  • Analysis
  • Attractions

© 2024 Cryptheory - F**k the forex, we want gains!

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.