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Scared of buying bitcoin? Try an ETF instead


Want to increase your exposure to businesses that are involved in cryptocurrencies? Here's how.

Aussie investors looking to gain exposure to the fast-growing crypto sector will soon be able to do so through an exchange traded fund (ETF).

As part of its expansion into new sectors, BetaShares has announced it's launching a crypto-focused ETF on the Australian Securities Exchange (ASX).

Rather than trading digital currencies directly, the ETF will track businesses exposed to cryptocurrency and blockchain technology instead.

Gaining crypto exposure without purchasing crypto assets

Despite being the best performing asset class over the last decade, many investors are still nervous about purchasing crypto assets.

As a recent Finder survey revealed, one-third of Aussies would rather buy shares or keep their money in savings instead of purchasing crypto assets, while a further one in four think they are overvalued.

Only one in six Aussies currently own any exposure to the asset class at all, with separate research saying only 9% of Aussies own Bitcoin.

During the announcement of its latest ETF, BetaShares acknowledged crypto assets could be scaring off potential investors. Its new ETF is aimed at those who want exposure to the asset class without holding actual cryptocurrency.

Noting crypto assets have been the best performing asset class, BetaShares acknowledged a lack of protection could be holding investors back.

As such, BetaShares CEO Alex Vynokur noted the new ETF is a way of investors gaining exposure to the asset class indirectly.

"The crypto economy is highly dynamic and growing rapidly, and is built using exciting and disruptive technology. CRYP will be an innovative way for investors to get exposure to the crypto sector in a familiar, liquid and cost-effective ETF structure."

What do investors actually own?

While the ETF will not give investors direct exposure to cryptocurrencies, it will track the Bitwise Crypto Industry Innovators Index.

This means investors will be exposed to companies that generate their revenue through crypto business activities.

The index is made up of 85% of companies that derive at least 75% of their revenue through servicing the crypto markets or have at least 75% of their net assets in liquid crypto assets.

The remaining 15% of the index is invested in large-cap companies with at least one significant business line that is focused on the crypto economy.

Investors should expect larger holdings in current index constituents, including cryptocurrency exchange platform Coinbase (COIN), Bitcoin mining company Riot Blockchain (RIOT) and business intelligence firm MicroStrategy (MSTR).

When will the ETF go live?

Bullish investors will have to wait on purchasing the ETF.

BetaShares states the Crypto Innovators ETF (CRYP) is expected to start trading on the ASX in the coming weeks, subject to regulatory approval.

Once it has listed on the ASX, you can invest in it through any regular share trading platform that offers Australian equities.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades. Read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for the product on the provider's website.

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