Chapter 4 : ETP structure
either holding direct cryptocurrency ( mostly bitcoin ) or trading cryptocurrency futures , according to Morgan Stanley data .
tokenised assets with traditional financial market infrastructure and the effect it will have on regulatory obligations of intermediaries such as transfer agents and distributors is a critical aspect in the development of a tokenised ETF marketplace .
Fund management will still play a role in this ecosystem . As with music and beaches , retail investors will continue to want bundles of assets representing the best companies , sectors and geographic regions for returns , whether that representation is via blockchain-based tokens or traditional stocks and bonds .
Like today , some investors will want active managers to curate funds of the best opportunities , based on their detailed analysis of individual investments . But many will want the lower costs and widespread diversification that comes through investing in indices and other large buckets of passively selected assets .
And , in this sphere , the ETF is in poll position to become a preferred fund-based wrapper for retail investors looking for access to private markets and other illiquid alternatives .
Firstly , it is the fastest-growing fund type of the past decade and its existing advantages in terms of liquidity and low fees will remain in a digital asset fund environment . Also , ETFs are at the forefront of existing use cases for blockchain in fund management .
Along with other exchange traded vehicles , such as ETPs and ETNs , they make up 46 of the 73 funds globally , with an AUM of approximately $ 70bn , either holding direct crypto currency ( mostly bitcoin ) or trading cryptocurrency futures , according to Morgan Stanley data .
And this early mover status in the crypto space is typical of the spirit of innovation which gave birth to ETFs and has been a feature of the market ever since .
They continue to be more cost effective and to outgrow mutual funds and the digital ETF market is expected to continue to grow as the ETF structure provides a low fee , transparent , regulated and listed vehicle by which institutions and other investors can add cryptocurrency and , in the future , digital asset exposure to their portfolios .
The future is coming but and , as with previous technological disruptions in legacy industries , the changes will be major . But for those who adapt , it will mean the ability to offer improvements that customers will see and feel as they interact with their savings and investments .
Marcus Grubb is global head of product and Nitin Gaur Global is head of digital asset and technology design at State Street Digital
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