Regulatory easing and Wall Street’s institutional embrace will continue to provide a favorable backdrop for cryptocurrency ETFs. While much of the space is concentrated on Bitcoin and Ethereum, stablecoins can also provide ample opportunities in crypto ETFs.
Kathy Kriskey, Invesco’s product strategist of commodities and alternatives, identified the passage of the GENIUS Act as a catalyst for greater adoption of cryptocurrencies. That includes stablecoins, in particular.
Stablecoin Adoption Benefits Ethereum
Heading into 2025, the capital markets were wondering how digital currencies would be treated by the incoming presidential administration under U.S. President Donald Trump. The GENIUS Act dispelled any notions that cryptocurrencies would fall to the wayside. It opened up more adoption to digital currencies, supporting the idea of America being a “leader in digital assets.”
One of the prime directives under the act is consumer protection. While proliferation of digital currency growth is to be welcomed, there must also be a regulatory framework in place that protects consumers, which includes the issuance of stablecoins.
“The GENIUS Act explicitly subjects stablecoin issuers to the Bank Secrecy Act, thereby clearly obligating them to establish effective anti-money laundering and sanctions compliance programs with risk assessments, sanctions list verification, and customer identification,” the White House said.
As Kriskey noted, stablecoins originate on the Ethereum network, thereby creating investment opportunities in the currency. Investors who want to avoid exposure on an unregulated exchange can get alternative exposure via ETFs. One in particular is the Invesco Galaxy Ethereum ETF (QETH). It provides investors exposure to the growth prospects of ethereum in the dynamic wrapper of an ETF on a regulated exchange.
Spillover Into BTC
Any strength in ethereum adoption is likely to spill over into the performance of bitcoin. The two leading digital currencies tend to move in tandem. Upside in one typically flows into the other.
One way to create a diversified cryptocurrency portfolio is to get exposure to the functional utility of Ethereum’s network via QETH, but also the store of value benefits derived from bitcoin. With that, consider exposure to an ETF like the Invesco Galaxy Bitcoin ETF (BTCO). Like QETH, BTCO provides easy exposure to the growth trajectory of bitcoin’s prices in an ETF wrapper. Again, it does so on a regulated exchange for hesitant investors not willing to risk exposure on an unregulated variant.
Both funds are available with an expense ratio of 25 basis points, or $25 per every $10,000 invested.
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