Institutional investors looking for cryptocurrency exposure should weigh the cost of remaining in their comfort zone.

German crypto custody firm Finoa crunched the numbers and found that crypto exchange-traded products (ETPs) are four to six times as expensive as custodial services. Specifically, Finoa found that single-asset ETPs had an average (mean) fee of 1.8% and multi-asset ETPs had an average (mean) fee of 2.3%.

This means a single asset crypto ETP on average is 4.6 times as expensive as the use of a custodian, and a multi-asset ETP is 6 times as expensive, according to Finoa. Crypto ETPs give investors the ability to access the upside of the underlying assets without having to deal with the crypto itself.

A study of 14 institutional-grade crypto custody providers, including Coinbase, Gemini, BitGo and Anchorage, found an average fee of 0.38% on a portfolio of $23.5 million.

“We’ve looked at the prices for all ETPs that are out there, and compared those with prices of the leading custodians globally. And there is this massive price difference,” said Marius Smith, Finoa’s head of business development, adding:

“It’s a cultural preference and not about price. A lot of these institutional investors are used to dealing with the same systems, asset managers and people that service them.” 

Some 53 single-asset ETPs were included in the study, from providers Grayscale, 21Shares, WisdomTree, VanEck, ETC Group, Iconic Holding, Evolve ETFs, CoinShares, Purpose Investments, CI Global Asset Management, Bitwise, 3iQ, First Block Capital, Valour and Leonteq. 

A further 13 multi-asset ETPs were included, from providers Grayscale, 21Shares, FiCAS, Iconic Holding, Bitwise and 3iQ. (Grayscale and CoinDesk share a parent company, Digital Currency Group.)

Smith said Finoa is under non-disclosure agreements with three or four large financial institutions and the mood is moving towards direct crypto exposure, given the possibility to put those assets to work in decentralized finance (DeFi), for example.

“We are definitely seeing the emergence of more index funds with multiple assets and so on, but none of them attract any real DeFi action,” Smith in an interview. “An institution could buy a stablecoin and begin to earn interest, or get exposure to a proof-of-stake protocol. Putting those assets to work is something you can do through a custodian.”