What Are Crypto ETNs and How Do They Work?
-
Loading... - Luna Alfaro
- 21 Feb 2023
- 75 Views
- 0 Like
- 0 Comment
Should you invest with a crypto ETN?
With cryptocurrencies making their way into the mainstream, more investors are using them to diversify their portfolios. Yet the high volatility of cryptocurrencies has made many investors skeptical, if not afraid, of investing their hard-earned money.
Enter crypto ETNs, an exchange-traded product used in the traditional finance world for years. Now, they present investors with a unique opportunity to invest indirectly in cryptocurrencies without scaling the steep learning curve of cryptocurrency.
So, what exactly are crypto ETNs, what are their benefits and risks, and are there any good ETN examples?
What Is a Cryptocurrency ETN?
Cryptocurrency Exchange-Traded Notes (ETNs) are financial products that track the price of a particular cryptocurrency, such as Bitcoin, Ethereum, or Solana. An ETN issuer, which is usually a financial institution, promises to pay an investor the return of the underlying cryptocurrency minus fees and other costs.
The financial institution does not have to buy the underlying cryptocurrency. Rather, they can invest it in whatever they want as long as, at the end of the investment period, they will pay the investor the pre-interest rate equivalent to the return achieved by the cryptocurrency.
Meanwhile, investors can trade ETNs on an ETN exchange, just like they would with cryptocurrency or stocks. This system allows anyone to invest in the cryptocurrency market without necessarily buying crypto. Read More…
