What would be your preferred method of storing your crypto assets when using Freetrade?
0 voters
Let the community know why youāve chosen a particular answer in the discussion below!
If the regulated custodial agreement gave access to the private keys of the wallet, I would be happy with that.
I get the sentiment, and this is the driver behind multi-sig arrangements (more here). Itās a sort of best of both worlds. Without this, thereās no way to assign liability in the case of theft. If both you and the institution hold the same key, you become a security risk that they are exposed to and this is uninsurable.
I think you should hold off until a consensus emerges among the big financial institutions on how to handle cryptocurrency storage. Iād also like to see a consultation with UK regulators and for Freetrade to listen to their recommendations (even if that includes avoiding crypto entirely).
I chose regulated custodial arrangement because: 1) I have private wallet providers elsewhere that Iām happy with (itād be a nice bonus if Freetrade had them though) 2) I think an ETF tracker fund with a basket of the top underlying cryptos would be a unique offering for the everyday investor. Rebalancing would take care of itself whereas with multiple private wallets one has to actively rebalance manually.
The best option would be too cooperate with someone like Coinbase which now has a custodian solution https://custody.coinbase.com/ . They are regulated in 33 countries for buying and selling are the biggest fiat onramp and also have a UK LTD. They also invest in crypto related companies through Coinbase Ventures.
Iām a crypto investor that now also invests in technology related startups (one being Freetrade).
I agree that institutional grade custody is a pre-requisite, but specifically in terms of Coinbase their lack of GBP deposits and withdrawals suggests to me theyāre having problems with banking partnerships in the UK. Hereās hoping they get it sorted soon, as they announced they would back in February.
Coinbase announced GBP support Buying bitcoin, ethereum and other cryptocurrencies with British pounds (GBP)
For active trading, a live wallet (e.g. a custody wallet at an exchange, a Lightning node, etc) is the most convenient option. For storage, if you donāt have sole possession of the private keys, you donāt possess the coins.
This is the ideal approach for those willing to engage in security with time and effort. But for the masses (and institutions) regulated, insured and accountable custodians offer a decent trade off between indirect ownership and being able to sleep at night.
And on this very point, news just in 
This is interestingā¦
Yep, Iāve held that in my Hargreaves Lansdown SIPP for just over a year now. Itās a bit pricey (something like 2.5% annual charge) but itās done very well for me!
Iām also interested to get Freetradeās take on Bakkt which was announced by ICE (owner of the NYSE) last week. Itās a next-day future with āphysicalā delivery but I think most interestingly, includes warehousing which will take care of the custody.
Supposedly this will be available to any broker plugged in to ICEās systems. Could this be the engine for Freetrade to offer Crypto? If so I could see it being one of the best offerings on the UK market.
If anyoneās been wondering why there hasnāt been more excitement about this ETN & how itās actually different from an ETF, like me, this is a pretty good explainer -
I donāt see it explained in that article.
To all intents an purposes it is the same as an ETF. Coinshares buy and sell āphysicalā bitcoin precisely in line with the units of the fund bought and sold. Therefore the NAV of the fund is always equal to the shares in issue.
The bitcoin is then held on cold storage by XAPO.
In fact, of all the bitcoin ETF applications out there at the moment only one (VanEck-Solidx) is physically replicated in this way, the rest are all synthetic based on futures.
I think the reason itās not getting much love this week is that ETNs are not widespread and not very well understood in the USA, but in reality this is just a branding/marketing problem in this case. The product is good, expensive (2.5% a year) but good and the only way to get bitcoin exposure in a tax-efficient way in the UK.
My bad, I posted the link to completely the wrong story there, Iāve fixed that now.
Iām not sure about that - given how much pent up demand there is among institutional investors, Iād have expected this news to have spread via word of mouth & the press once it was publicised if this was what investors really needed. This sort of explanation (from the right story 
) seems more likely in my opinion -
āThis is not as big as [it would be] if it was SEC regulated. An ETF in the U.S. ā that was SEC registered ā would have a much bigger effect. But, if there is something that is driving new money into the price of Bitcoin, then you would imagine it would raise it up.ā
This is what @anon2636484 was meant to post I presume.
https://cointelegraph.com/news/etn-vs-etf-which-is-the-investors-dream
I think the tax advantage of the SIPP means it represents very good value, and fair play to HL for allowing investors to make their own decisions even if it does mean they are facilitating the holding of a wildly volatile asset for what should be considered retirement income. A rare example of common sense prevailing. Even in a GIA you could justify the expense for the convenience - weāve spoken before about how difficult it is to retain your own private keys and trust yourself not to mess it up!
Certainly food for thought, and the wider variety of adoption methods out there the more legitimacy it inevitably gains. Iām very interested to see how it plays out because I personally see the existing ETF / ETN infrastructure as appropriate for most passive investment needs (in the same way it is for gold). It then becomes a question of what do customers actually want - to speculate or spend? Itās not clear weāve arrived at the latter yet.
This is correct and I cite the perceived lack of enthusiasm to be on account of it not being a domestic American product, as @anon2636484 has pointed out. There is technically a difference in the risk profile in that a fundās assets are indirectly owned by the investors, whereas a noteās investors have a debt obligation against the issuer. As such, the latter attracts counterparty risk because of the possibility of default. As you say, in this case it is immaterial given the physical replication, which is auditable.
Interesting in this regard is the case of GBTC (an American bitcoin tracker reserved for accredited investors and institutions). Historically it has always traded at a massive premium due to it being the only US issuer of an instrument that legitimately tracks bitcoin in lieu of anything exchange-traded or more adoption friendly. Its premium has fallen markedly in the last week or so and I expect it will continue to do so now that XBT Provider is being marketed in the States. This is a solid indicator that the note is fit for purpose, but invariably some will wait for the SEC to green light a domestic fund.
Interesting! I suppose institutional investors are less likely to react quickly to this news or to make their plans to use the note public so perhaps weāll see some announcements in the future - which might then cause the market to react..
A post was merged into an existing topic: Buying bitcoin, ethereum and other cryptocurrencies with British pounds (GBP)