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Alternative Investment

Are exchange traded products a better alternative to crypto?

3iQ Digital Asset Management, Coinbase (NASDAQ:COIN) and Tetra Trust company have forged a partnership in order to expand the exchange-traded products (ETP) ecosystem for digital assets in Canada and drum up some interest from the investment community.

Packaging digital assets in an exchange-traded vehicle gives credible and efficient funding technology. The architecture of ETPs provide investors with the confidence required to invest with low cost, liquidity and transparency.

“3iQ’s goal is to continue innovating within the digital assets ecosystem in North America and across the globe. By joining forces, we believe our collective industry leadership will further ensure that investors have their digital assets stored and settled within a safe and secure environment. We look forward to introducing new strategies and supporting cutting-edge products while working to strengthen the overall crypto landscape,” said Fred Pye, chairman and CEO of 3iQ.

This collaboration was position Coinbase and Tetra as custodians for 3iQ’s exchange traded products, including the 3iQ CoinShares Bitcoin ETF (TSX:BTCQ) and the Bitcoin Fund (TSX:QBTC), as well as the CoinShares Ether ETF (TSX:ETHQ) and the Ether Fund (TSX:QETH). The company also chose Coinbase Prime for crypto trading, prime brokerage and reporting capabilities for its crypto ETP products.

Read more: Coinshares and German crypto market Xetra offer Algorand ETP

Read more: The Mugglehead technology roundup: surviving the crypto-winter edition

ETPs are types of securities that track underlying securities, an index or other financial instruments. They’re traded on exchanges similar to stocks, which can mean price fluctuations and volatility, but the prices of ETPs are taken from the underlying investments they track. In this case, these are cryptocurrency investments, which means higher volatility, but potentially higher payoff.

The three companies are banking on the idea that putting these products together on the market could theoretically present an attractive opportunity for investors, especially if they’re otherwise new to the space and still trying to figure out the best point of entry. Having partners in the space with the know-how and expertise working together can lead potentially to scalability and be a considerable stepping stone to further adoption.

“Tetra is excited to be working with 3iQ and Coinbase to create a superior custody model for the Canadian crypto ETP segment. Our inclusion in this partnership is a validation for our made-in-Canada regulated custody solution for digital assets, and we believe our unique value proposition will help support further development of the Canadian ecosystem,” said Didier Lavellee, CEO of Tetra Trust.

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