Investing in crypto-ETPs
What does this mean?
If you’d like to know more about investing in cryptocurrencies, but don’t know where to begin, you can invest in crypto-ETPs (Exchange Traded Products) with our Self-directed Investing Plus account. We’ll explain what a crypto-ETP is and outline the risks involved, so that you can make an informed decision.
Investing involves risks. You could lose (some of) the money you invested.
What is a crypto-ETP?
A crypto-ETP is an investment product that is traded on the stock market. The value of a crypto-ETP largely tracks the price of a cryptocurrency, such as Bitcoin or Ethereum. Buying crypto-ETPs is not the same as buying cryptocurrencies directly, as you invest through the stock market and don’t actually own the cryptocurrencies yourself. You can buy and sell ETPs on the stock market in the same way as shares and ETFs.
How do crypto-ETPs work?
Every crypto-ETP tracks the price of a cryptocurrency. If Bitcoin increases in value, the value of a Bitcoin-ETP also increases. If the value of Bitcoin drops, the value of the ETP also drops. Crypto-ETPs are traded on regulated stock markets and issued by regulated financial institutions. You don’t need a dedicated crypto exchange or crypto wallet.
You’ll find more information about crypto-ETPs in the prospectus and the Key Information Document (KID).
Costs
You pay transaction costs for investing in ETPs. These costs are the same as the costs you pay for ETFs outside the basic Self-directed Investing Plus range. You’ll find a current overview of costs on the Self-directed Investing Plus cost information sheet.
What are the risks involved in crypto-ETPs?
Risks
Investing in crypto-ETPs involves risks. Some of the risks relate to the huge fluctuations in the value of cryptocurrencies. Other risks are linked to the way that an ETP is built up.
It’s important to understand these risks before you start investing. Only invest in products that match your knowledge and experience. Crypto-ETPs are complex investment products. If you want to invest in them, you must first pass a knowledge exam.
Investing in crypto-ETPs is a high-risk activity, which can lead to huge losses.
Restrictions on buying and selling
Crypto-ETPs can only be bought and sold during stock market opening hours. This means that the price of an ETP can differ from the current price of the cryptocurrency outside the stock market opening hours, and you may not always be able to respond to price fluctuations immediately.
Price risk
The value of the underlying cryptocurrency can rise and fall sharply. This means that you could lose all or part of your initial investment.
Crypto-ETPs track the crypto market. If trading stagnates (temporary lack of liquidity), it may be difficult to sell an ETP.
Cryptocurrencies are not an official means of payment. They are not supported by the government or central bank. In addition, there are extra risks involved, such as risks relating to the party issuing the product, storing crypto, technical problems and changes in regulations and legislation.
Credit risk (only with synthetic ETPs)
You run a risk with the issuer of the ETP. If the issuer goes bankrupt, you may lose your entire investment.
Crypto-ETPs are issued through a Special Purpose Vehicle (SPV). This is intended to protect you as an investor if the issuer goes bankrupt.
In the case of physical crypto-ETPs, the SPV stores the cryptos in a regulated storage facility. This ensures that the cryptos don’t become part of a settlement in the event of bankruptcy, thereby reducing the risk.
The risk is higher with synthetic products, because these products work with derived products and third parties. This is why we only offer physical crypto-ETPs. Our experts check the way the product is set up and the parties involved before an ETP is approved.
Risk of staking with Ethereum ETPs
If ETPs are linked to Ethereum (ETH), there may be a risk of staking. Staking involves risks. The value can fluctuate hugely, your money can be temporarily blocked, and you may incur fines if the parties managing the network make mistakes. You’ll find more information about this in the product documentation for ETPs with Ethereum as underlying crypto.
Liquidity risk
There’s always a possibility that trading with crypto ETPs will stagnate, making it difficult to buy or sell an ETP at the price you would expect.
Before offering a crypto-ETP, we always assess the tradability of the product, checking the market and checking which currency is being traded the most.
Security risks
Investing in crypto-ETPs involves security risks, such as fraud and cybercrime. Digital systems can be targeted by hackers.
The regulations covering ETPs are stricter than those for investing directly in cryptocurrencies. However, there are still risks, for example the risk of managers being hacked or the risk of fraud if dishonest parties give misleading information.
Risks
Investing in crypto-ETPs involves risks. Some of the risks relate to the huge fluctuations in the value of cryptocurrencies. Other risks are linked to the way that an ETP is built up.
It’s important to understand these risks before you start investing. Only invest in products that match your knowledge and experience. Crypto-ETPs are complex investment products. If you want to invest in them, you must first pass a knowledge exam.
Investing in crypto-ETPs is a high-risk activity, which can lead to huge losses.
Restrictions on buying and selling
Crypto-ETPs can only be bought and sold during stock market opening hours. This means that the price of an ETP can differ from the current price of the cryptocurrency outside the stock market opening hours, and you may not always be able to respond to price fluctuations immediately.
Price risk
The value of the underlying cryptocurrency can rise and fall sharply. This means that you could lose all or part of your initial investment.
Crypto-ETPs track the crypto market. If trading stagnates (temporary lack of liquidity), it may be difficult to sell an ETP.
Cryptocurrencies are not an official means of payment. They are not supported by the government or central bank. In addition, there are extra risks involved, such as risks relating to the party issuing the product, storing crypto, technical problems and changes in regulations and legislation.
Credit risk (only with synthetic ETPs)
You run a risk with the issuer of the ETP. If the issuer goes bankrupt, you may lose your entire investment.
Crypto-ETPs are issued through a Special Purpose Vehicle (SPV). This is intended to protect you as an investor if the issuer goes bankrupt.
In the case of physical crypto-ETPs, the SPV stores the cryptos in a regulated storage facility. This ensures that the cryptos don’t become part of a settlement in the event of bankruptcy, thereby reducing the risk.
The risk is higher with synthetic products, because these products work with derived products and third parties. This is why we only offer physical crypto-ETPs. Our experts check the way the product is set up and the parties involved before an ETP is approved.
Risk of staking with Ethereum ETPs
If ETPs are linked to Ethereum (ETH), there may be a risk of staking. Staking involves risks. The value can fluctuate hugely, your money can be temporarily blocked, and you may incur fines if the parties managing the network make mistakes. You’ll find more information about this in the product documentation for ETPs with Ethereum as underlying crypto.
Liquidity risk
There’s always a possibility that trading with crypto ETPs will stagnate, making it difficult to buy or sell an ETP at the price you would expect.
Before offering a crypto-ETP, we always assess the tradability of the product, checking the market and checking which currency is being traded the most.
Security risks
Investing in crypto-ETPs involves security risks, such as fraud and cybercrime. Digital systems can be targeted by hackers.
The regulations covering ETPs are stricter than those for investing directly in cryptocurrencies. However, there are still risks, for example the risk of managers being hacked or the risk of fraud if dishonest parties give misleading information.
The difference between a physical and a synthetic ETP
How to invest in crypto-ETPs with ABN AMRO
You can buy a crypto-ETP yourself through a Self-directed Investing Plus account. You don’t need a crypto exchange or crypto wallet. You can arrange everything easily in the ABN AMRO app, in a familiar environment.
What you need:
- A Self-directed Investing Plus account
- Enough knowledge and experience of complex investment products
- You must have passed the knowledge exam about exchange traded notes and certificates
Always read the official product information, such as the prospectus and the Key Information Document (KID), before you start investing in crypto-ETPs.
Learn and test your knowledge
How much do you already know about investing? And how much experience do you have? We use this information to determine which investment products are right for you. This is why we ask you a few questions about your knowledge and experience before you start investing.
If you have Self-directed Investing Plus and want to invest in complex investment products, such as crypto-ETPs, you must be able to demonstrate that you understand how these products work and are aware of the risks involved.
We’ll ask you to complete a questionnaire and take a knowledge exam about Exchange Traded Notes and Certificates. You’ll only be allowed to order ETPs if you pass this exam.
Frequently asked questions
Important product information
Always read the official product information first, such as the prospectus and the Key Information Document (KID). These documents help you to properly understand the features and risks of a product before you start investing.
Investing involves risks
Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.