Posted by In general, the maxim “Not your keys, not your coins!” applies in the DeFi world. This means that if you do not personally own the private keys for your coins, then you are not really the owner of these coins. This comes from the fact that in the crypto world, only those who have the private keys for certain coins can spend or transfer these coins. So, for example, if you buy coins through centralized crypto exchanges like crypto.com or binance.com, or invest in crypto products through traditional exchanges like SIX or NYSE, then from a blockchain perspective, you are not really the owner of the cryptos, since the private keys to “your” cryptos are managed by centralized institutes. For DeFi cracks this is a no go. But what should the crypto newcomer do who has neither the desire nor the time to cope with hardware wallets, steel plates, and the like and who doesn’t really have an opinion on which of the countless crypto tokens will win in the future? Personally, I know many people who fall into this group who tell me that they would prefer to invest into a broad crypto market index via their bank’s mobile banking using a traditional exchange such as the SIX Swiss Exchange. Fair enough… if you don’t feel comfortable dealing with hardware wallets and the like, you might be better off going the traditional way.
Therefore I set out and looked for a broad crypto ETF on the SIX Swiss Exchange. Unfortunately, I couldn’t find any such crypto ETF. I can find some Bitcoin-only or Ethereum-only ETFs, but ETFs on crypto indices still seem to be in short supply (or reserved for institutional investors). However, the situation is somewhat different in the ETP area, where SIX Swiss Exchange, according to its own information from March 23, 2022, offers around 133 tradable crypto ETPs from 10 different issuers (First Fidelity Bitcoin ETPs listed on SIX Swiss Exchange, 2022).
But what are ETPs? The abbreviation ETP stands for Exchange Traded Products and these are secured crypto products that can be traded on the stock exchange (But beware: ETPs are not subject to the Collective Investment Schemes Act and are therefore not supervised by FINMA!). When I comb through these 133 ETPs, I quickly realize that only very few of them cover a broad crypto index, nonetheless I can find a few exciting crypto index ETPs such as the SEBA Crypto Asset Select Index ETP, the Sygnum Platform Winners Index ETP or the WisdomTree Crypto Market ETP. Each of these ETPs covers a slightly different crypto index (e.g. equally weighted vs. market cap weighted vs. momentum weighted), so make sure you study the relevant fact sheets and risk information carefully before investing. Among other things, you can also see from the fact sheet who is responsible for the custody of the cryptos (more precisely: the corresponding private keys), which is central from a risk perspective.
I hope I was able to give you a first insight into the possibilities and limitations of investing in crypto indices via traditional exchanges with this post. If you prefer to go the decentralized way and want to invest in crypto indices via DeFi protocols such as the Set Protocol, you will find here the appropriate guide.