Leo Mindyuk is the CEO of ML Tech.
There’s no doubt crypto ETFs have made a splash since their U.S. debut earlier this year, with potentially record-breaking growth. In today’s issue,Earlier this year, cryptocurrencies made a great leap toward mainstream adoption as the U.S. Securities and Exchange Commission finally approved trading U.S. exchange-traded funds that track spot bitcoin and ether.
This meant that, for the first time, investors could trade regulated Bitcoin and Ether spot-based instruments on regulated U.S. exchanges. More importantly, it meant that crypto had finally gained the imprimatur of securities regulators and was no longer considered some sort of rogue investment, bought and sold only by technology fanatics.As a result, millions of novice investors are getting their first taste of crypto by buying bitcoin and ether ETFs.
Separately Managed Accounts, or SMAs offer significant advantages over ETFs for institutional investors to invest in crypto via actively managed accounts.Crypto SMAs are portfolios of digital assets managed on your behalf by a professional investment manager. This last part – “professional investment manager” – is particularly important with crypto. Crypto is still new, in some ways, crypto doesn't trade in the same ways as stock does.
Additionally, active management allows you to change the allocations. While passive management may be great for some investments, it can lead to very steep losses for crypto. Cryptos often move fast, not a good dynamic for passive strategies.Active management in SMAs can of course, potentially outperform an underlying coin or coin index. Experienced managers can leverage market analysis, trading strategies and timing to capitalize on market opportunities, which you don’t get with an ETF.
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