The fees charged by crypto ETPs might be up to six times more than those charged by third-party custodians

Institutional investors considering bitcoin exposure should consider the cost of staying put.

Finoa, a German crypto custody provider, did the math and discovered that crypto exchange-traded products (ETPs) fees are four to six times higher than custodial fees. Finoa discovered that single-asset ETPs charged an average (mean) fee of 1.8 percent, while multi-asset ETPs charged a price of 2.3 percent.

According to Finoa, a single-asset crypto ETP's expense ratio is 4.6 times that of a custodian, and a multi-asset ETP's expense ratio is six times that of a custodian. Crypto ETPs allow investors to profit from the underlying assets' upside without having to deal with the cryptocurrency.

The average fee on a $23.5 million portfolio was 0.38 percent, according to a research of 14 institutional-grade crypto custody providers, including Anchorage, Bitcoin Coinbase, and Gemini.

“We looked at the prices of all ETPs available and compared them to the prices of the world's largest custodians. And there's a huge pricing difference,” Marius Smith, Finoa's head of business development, explained, adding, “It's a cultural choice, not a price difference.” Many institutional investors are accustomed to interacting with the same systems, asset managers, and service providers.”

In total, 53 single-asset ETPs were investigated. Grayscale, 21Shares, WisdomTree, VanEck, ETC Group, Iconic Holdings, Evolve ETFs, CoinShares, Purpose Investments, CI Global Asset Management, Bitwise, 3iQ, First Block Capital, Valour, and Leonteq were among the companies whose products were listed.

Grayscale, 21Shares, FiCAS, Iconic Holding, Bitwise, and 3iQ were among the other 13 multi-asset ETPs listed. (Digital Currency Group, which owns both Grayscale and CoinDesk, is its parent business.)

Finoa has non-disclosure agreements with three or four significant financial institutions, according to Smith, and the atmosphere is shifting toward direct crypto exposure, given the possibility of putting those assets to work on a DeFi platform, for example.

In an interview, Smith stated, “We are absolutely witnessing the introduction of more index funds with different assets and so on, but none of them draw any meaningful DeFi action.” “An institution might acquire a stablecoin and start earning income right now, or they could learn about the proof-of-stake protocol. You can put those assets to work with the help of a custodian.”

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