Luxemburg, 03 July 2025 – Investing in Bitcoin and other cryptocurrencies via exchange-traded notes (ETNs) is often marketed as a fusion of traditional finance and digital innovation. Yet the supposed benefits of both worlds frequently cancel each other out. “Crypto ETNs not only undermine the core principle of decentralised currencies, they are also inefficient and stifle innovation”, says Stephan Blohm, Board Member at financial services provider securities.lu.
Exchange-traded products (ETPs) have become some of the most widely used financial instruments. Chief among them are ETFs, which offer easy access to entire equity indices with a single transaction. ETNs, by contrast, are often designed to provide exposure to individual assets, including cryptocurrencies like Bitcoin. They promise ease of use: no need for a crypto wallet or exchange account, just simple access through a broker platform. However, this convenience comes at a cost.
ETNs are centralised financial products issued by a third party and traded on traditional exchanges. Investors do not own the underlying coins but instead hold securities that merely represent a claim on them. As a result, key advantages of cryptocurrencies, such as self-custody, decentralisation, and 24/7 trading, are lost. “Crypto ETNs sacrifice several of the core promises of cryptocurrencies and blockchain technology”, Blohm points out.
Moreover, ETNs reinforce the traditional structures of the financial system and hinder progress toward decentralised innovation. “Rather than advancing new, natively digital instruments, crypto is being forced into outdated frameworks”, Blohm argues. “Fundamentally digital assets are being turned into conventional securities. That’s absurd.”
In fact, there is no need to replicate cryptocurrencies through legacy products like ETNs. “Tokenised crypto portfolios deliver on the promises ETNs make, only better”, says Blohm. “They offer full transparency, high efficiency and true around-the-clock tradability.” Security tokens enable real-time management, diversification, and rebalancing of crypto portfolios – all without reverting to the tools of the old financial world.
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