Finally, indexes are required benchmarks for index-linked products such as mutual funds or ETP offerings.
Therefore, with cryptoasset index-linked products growing globally, the need for transparent crypto single-asset and multi-asset indexes will continue to grow. ETFs will expand the reach of crypto further in the investable universe. Unlike holding cryptoassets directly, an ETF or mutual fund is not subject to security and custody challenges. This enables the holder to be protected in the case of a potential account hacking. This is especially the case for multi-asset and thematic indexes, where investors can buy one fund instead of having to monitor multiple trades and custodies.
ETFs also unlock the potential for investors to short sell Bitcoin or any other cryptoasset, something which can only be mimicked in the current crypto trading paradigm. Finally, given that crypto is currently largely unregulated, many potential investors, like sovereign wealth and pension funds, are unable to hold the asset or invest in crypto. By creating an ETF, crypto would unlock large pools of capital to flow into the space.