A recent survey on exchange-traded products (ETPs), sponsored by JP Morgan and State Street¹, provides some valuable insights into what many professional investors are thinking about regarding gaining exposure to crypto assets.  

The survey asked more than 500 global professional investors with a combined US$900 billion in ETF strategies about their investment decisions, including current market trends around ESG, thematic strategies, and active investing.  

Questions were also asked about crypto asset ETPs, and the findings are consistent with the conversations we’ve been having with professional investors over the last few years. While many respondents have no current crypto exposure, there is growing interest in crypto ETPs as “a more accessible investment vehicle” that will contribute to the continued presence in portfolios. Here are the five most notable findings from the survey:  

 

1. While Bitcoin and Ethereum continue to dominate the crypto investment landscape, 42% of survey respondents said they are willing to venture away from these two assets.

 

2. Professional investors see the benefits of using ETPs as a wrapper for crypto investing. 47% expressed their willingness to consider investing in multi-cryptocurrency ETPs.

 

3. Survey results suggest that professional investors are “increasingly ready to embrace cryptocurrency ETPs as part of their investment strategies” as more than a third of respondents are hesitant to deal with the complexities of direct investing. 

 

4. The growth of the crypto asset class suggests increasing acceptance as a store of wealth and an alternative investment that can hedge against fiat currency depreciation.
   
   

5. In a crypto market characterized by significant volatility, “liquidity matters”, which is why “investors are turning to ETFs which can trade like stocks without lock-in periods or a redemption process”.

 

Hashdex launched the world’s first crypto index ETF and we strongly believe in the benefits of investing in a diverse basket of crypto assets in regulated ETPs. While direct investing might be right for some, for the overwhelming majority of professional investors it creates operational burdens, such as self-custody, that makes regulated investment products a far better option.   

The Nasdaq Crypto Index Europe (NCIE), developed by Nasdaq in partnership with Hashdex, was created to provide this type of dynamic exposure to the asset class for institutional investors. Our ETPs track the NCIE and we believe the robust methodology is a best-in-class approach that gives investors exposure to the most promising assets within the rapidly developing crypto ecosystem. To be included in the NCIE, crypto assets must meet strict criteria: 

 

 

This process, along with our focus on “Know Your Token” processes to help meet AML/KYC needs and manage reputational risks, helped us avoid exposure to FTX and the other high profile crypto industry failures in 2022. We believe investors recognize the importance of this type of operational diligence, and as the survey results show they are also increasingly recognizing the benefits of having broad, regulated exposure to this emerging asset class.  

 

^{[1] Trackinginsight Global ETF Survey 2023 Results, May 2023}

 

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