Indirect Asset Structure refers to holding or gaining exposure to an underlying asset through an intermediary or a derivative instrument, rather than through direct ownership of the asset itself. In the crypto context, this often involves investments in funds, exchange-traded products (ETPs), tokenized derivatives, or synthetic assets that derive their value from cryptocurrencies like Bitcoin or Ethereum. This structure is frequently used by institutions to manage regulatory, custodial, or operational complexities associated with direct crypto ownership.
Mechanism
The mechanism typically involves an investment vehicle or a financial product issuing a claim or representation of the underlying crypto asset. For instance, a crypto ETP issues shares that track the price of Bitcoin, while the fund manager holds the actual Bitcoin. In DeFi, synthetic assets might be created by collateralizing other digital assets in a smart contract, mimicking the price movement of an underlying crypto asset without direct acquisition.
Methodology
The strategic approach for utilizing indirect asset structures focuses on achieving crypto market exposure while navigating regulatory constraints, operational overheads, and security concerns. By delegating direct asset custody and management to specialized entities or smart contracts, institutions can access the asset class through regulated or more familiar investment wrappers. This methodology offers a pathway for traditional finance participants to participate in crypto markets, often providing enhanced liquidity, reporting, and compliance features compared to direct asset ownership.
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