July 11, 2018
To whom it may concern,
cryptocurrencies and the underlying blockchain technology are constantly rising in popularity. A lot of retail investors are interested in investing in this potential revolution.
The problem these retail investors face though is to overcome the big barriers of entry when it comes to purchasing crypto assets. What they need to do is: Find the right exchange for their needs -> register there and trusting the company to keep their KYC information safe -> send money to this exchange, while being exposed to scams -> figure out which cryptocurrency to buy without falling for scam coins offered on shady exchanges -> figure out how to store crypto so that they aren't exposed to any third party risk that exchanges face -> correctly transfer crypto without losing it (like sending to a wrong address).
All of these challenges might be easy to solve for someone with knowledge on the matter, though not for a retail investor who is new to the whole concept of crypto.
An ETF would give retail investors the option to safely buy legit crypto assets without being exposed to possible scams, may it be in the form of coins itself or malicious exchanges / middlemen. Furthermore, the need for proper storage would be eliminated.
On top of that, ETFs offer great liquidity which most of the exchanges nowadays lack. A common way to buy bigger amounts of crypto is through OTC which once again exposes you to several risks.
In general the risk of fraud / hacks would be diminished through the insurances associated with ETFs.
Except for the high volatility of crypto there's no real disadvantage to offer such an ETF. In the end this high volatility only exists due to the lack of traditional trading methods (options, asset-backed futures etc.). An ETF would be the right way to offer investors exposure in this growing environment while not exposing them to the risks associated with crypto normally.
Best regards and thank you very much,
Robin Davids.