How To Invest in Crypto Without Buying Crypto
You can obtain exposure to cryptocurrencies without buying any by acquiring shares of Bitcoin Spot ETFs, Bitcoin Trusts, or ETPs connected to cryptocurrency futures through cryptocurrency exchanges. The Securities and Exchange Commission also given three exchanges the green light to begin listing eight Ether Spot ETPs in May 2024.
These indirect means of investing in crypto are substantially cheaper and maybe less dangerous than acquiring bitcoin directly. Here’s what you need to know if you want to invest in crypto without buying crypto.
What Is Indirect Crypto Investing?
If you wish to avoid crypto account registration on exchanges you can opt for alternative investment methods that bypass traditional cryptocurrency acquisition. You can indirectly get involved with cryptocurrencies through regular investment vehicles such as stocks and mutual funds and ETFs.
There are benefits and downsides to consider, including security, costs, and the possibility of losses. When you buy cryptocurrency through third parties, those funds are going to make their keep somehow, therefore you should consider any additional charges when considering whether to acquire crypto utilizing an indirect way.
Here are several ways you may invest in crypto indirectly.
Crypto ETFs
When looking to acquire wide access to a certain asset class, the first port of contact is generally ETFs. Investment funds may be found that track pretty about anything, from gold to the S&P 500. Unfortunately, with cryptocurrencies, it’s a little more tricky.
After several years of refusing spot cryptocurrency ETF applications, the Securities and Exchange Commission (SEC), under pressure from a 2023 D.C. Court of Appeals judgment, authorized the first 11 in January 2024. Previously, the regulator only granted the green light to ETFs that owned bitcoin futures contracts. Here are some:
Ethereum ETFs
Once spot Bitcoin ETFs were allowed, clamor rose stronger for Ethereum's native currency, ether, to gain the same status. Ether-based ETFs were only allowed to utilize futures contracts to follow the price of ether rather than directly owning the digital currency, as standard ETFs and now many Bitcoin ETFs can do. However, this has altered with the SEC's May 2024 exchange plan approval.
Asset managers including VanEck, Grayscale, and Fidelity have asked for authorization to create Ethereum ETFs, which would provide investors exposure to the world's second-largest cryptocurrency via SEC-regulated funds. This would likely provide Ethereum better liquidity, increase price monitoring, and lead to possibly cheaper costs than futures-based ETFs can offer.
Crypto ETFs vs. Crypto ETPs
Financial instruments known as ETPs function to track stocks or indexes or exchange-listed financial products. Users can acquire and trade these financial instruments at any time following stock market hours. ETFs represent the dominant group of Exchange-Traded Products (ETPs). Two specific ETPs exist as exchange-traded notes focusing on debt instruments and exchange-traded commodities that track commodity prices including precious metals together with agricultural products and energy commodities.
Spot bitcoin ETFs received approval from the SEC in January 2024 which labeled them as ETPs under the Securities Act of 1933 instead of designated ETFs by the Investment Company Act of 1940. Although ETP labels the products incorrectly Investopedia supports their widespread industry usage over the SEC's official decision.
What are the implications? Besides having a less diverse portfolio, ETPs are controlled by slightly different rules. Diversification and the type of assets owned had a part in this categorization. With bitcoin ETPs, tangible spot exposure is offered to a single commodity of cryptocurrency. Conventional funds, like other ETFs and mutual funds, must contain a more varied spectrum of assets. Registered under the Securities Act of 1933, ETPs are not subject to the same diversification and leverage limits as ETFs.
Congressional Research Service. "SEC Approves Bitcoin Exchange-Traded Products (ETPs)," Page 2. This allows more freedom in the sorts of assets they can own, including cryptocurrency.
Cryptocurrency and Blockchain Stocks
People who don't want to acquire digital tokens can still invest in crypto by purchasing shares in blockchain-focused companies or those holding cryptocurrency on their statements.
Blockchain technology specialists operate multiple business units devoted to crypto mining combined with software development alongside other blockchain-based products and services. Таke a look at the firms Riot Blockchain (RIOT) together with Canaan (CAN), plus HIVE Blockchain (HIVE) and Bitfarms (BITF). These firms present diversified sets of risk aspects together with variable organizational benefits when compared to pure cryptocurrency entities.
Some corporations either hold cryptocurrency assets or maintain direct involvement with cryptocurrency networks. As an example Coinbase (COIN) operates as a publicly traded exchange platform that ranks among the largest cryptocurrency exchange services in the market. The company possessed more than 74,000 bitcoin and diverse types of cryptocurrency at the close of its 2023 fiscal year according to its Form 10-K report filed on December 31st.
Read Also: How to Start Mining Cryptocurrency
Crypto and Your 401(k)
You may invest a part of your retirement assets in cryptocurrency with no effort. In 2022, Fidelity stated that consumers may add Bitcoin to its 401(k) accounts. Fidelity buys the coins and holds them in a digital asset account.
This was a huge step toward bringing cryptocurrencies completely inside the mainstream through typical retirement investing portfolios. Ultimately, it's generally up to your company to decide on the precise portfolio of funds available to you for your 401(k).
Credit Card Rewards
Credit card rewards are one last technique to expand your bitcoin portfolio without opening your money wallet. Several cards allow you to earn bitcoin when you swipe, tap, dip, click, or do anything else to use a credit card for payment.
Examples of cryptocurrency credit cards include the Gemini Credit Card, and cards issued by the Crypto.com and Coinbase exchanges.
Some cards, like the Venmo credit card, allow various redemption alternatives, including bitcoin. When you earn crypto as a credit card reward, you invest in crypto without buying crypto.
Is Crypto Worth Investing in?
Conservative users of cryptocurrency must dodge multiple dangers which include cyber intrussions alongside regulatory fluctuations alongside expansive financial losses alongside regulatory disturbances. Chart your digital currency financial journey with an educated advisor who follows digital currency practices.
How can Beginners Invest in Cryptocurrency?
Knowing how to invest in crypto might be overwhelming, considering the intricacy of blockchain technology, the excitement around it, and the various accessible currencies. The first stage is to come up to speed on the principles of cryptocurrencies, how blockchain technology underlies them, the sort of crypto wallet you will need, and the variations among cryptocurrencies like bitcoin, ether, and altcoins. Reputable resources such as Investopedia and courses given by universities—many freely available online—can be beneficial. Platforms like Coinbase or Binance can be a smart alternative for your early steps into the market as they feature accessible interfaces and resources to guide you. Once in, remain informed on crypto news and regulatory developments.
Which Crypto Is Best to Invest in Now?
Loss of wealth through violent price volatility stands as one of the main dangers when you invest in bit coin. Before investing in crypto currencies seek professional guidance from someone who understands this market field for determining their suitability according to your financial situation. When investing in crypto currencies you must only use money that you can lose since spending more than your funds allow can lead to significant financial risks.
The Bottom Line
Investing in bitcoin directly includes getting set up on an exchange and finding ways to keep your digital assets safely. It may also mean potentially having a lot of money tied up in a risky asset.
Fortunately, there are alternatives. You can invest indirectly in cryptocurrencies through ETFs that own future contracts connected to currency values, bitcoin ETFs that securitize bitcoin holdings, or by acquiring shares in firms involved in cryptocurrency mining, software development, and other services. Alternatively, you might try a credit card with cryptocurrency incentives or check whether your company provides this asset class through your 401(k).