What does a crypto ETP cost?

What does a crypto ETP cost?

A crypto ETP has an ongoing product fee and costs associated with trading it. The fee is deducted within the product, while a purchase or sale can involve a bid–ask spread, broker commission and currency conversion. A broker may also charge for the account itself. The annual management fee alone therefore does not describe everything an investor pays.

Virtune Bitcoin Prime ETP is one example. It provides Bitcoin price exposure through a listed security, with the underlying Bitcoin held as collateral. Its current management fee and the main trading-cost categories appear below.

Costs when buying Virtune Bitcoin Prime ETP

Cost	Charged by	When
Brokerage commission	Broker	On every purchase and sale
Difference between bid and ask price	Market	On every trade
Management fee, 0.25% per year	Issuer	Ongoing, from the product's value
Currency conversion	Broker, if applicable	If the product trades in another currency

How is the management fee deducted?

Virtune applies the annual fee rate daily by reducing the amount of the underlying crypto-asset represented by each ETP. The holder does not receive a separate invoice for that fee. It is reflected in the asset entitlement and product value.

If the crypto price were unchanged, the same security would gradually represent a little less of the asset because of the fee. That is why comparing only the movement in the crypto price with the value of an ETP misses part of the calculation.

A search for a crypto ETP's TER, or total expense ratio, is often a search for its annual product charge. A quoted annual rate is distinct from the costs of placing a trade. Broker commission, the spread and any currency conversion still need to be considered separately.

What is the spread, and who sets it?

The spread is the gap between the price at which the security can be sold and the price at which it can be bought. For a hypothetical quote of 99 to sell and 101 to buy, buying and immediately selling at those same quotes would leave a difference of 2 per security, before broker charges. This example illustrates a trading cost, not a Virtune product's current price or spread.

Market makers post buy and sell quotes under exchange rules. Their quoting obligations apply in normal market conditions and include maximum-spread limits. The spread is not an additional management fee paid to Virtune. Market-maker quotes can change during trading.

If the market maker temporarily stops quoting, an order can execute against other investors' orders at a different price. The trading arrangements do not promise a particular spread or execution price.

What does the broker charge?

Commission on purchases and sales, account charges and currency conversion charges belong to the broker's pricing. They differ by broker, account and service. A low product fee does not establish what the broker will charge for a transaction.

The broker's order screen and price list show these charges for the selected listing. The European broker guide explains which brokers and venues offer access to Virtune's products, without ranking brokers by price.

How does currency affect the result?

There are two different effects: a charge for converting cash, and a change in the investment's value when measured in the account's currency. They can occur separately.

Many of Virtune's ETPs are cross-listed, so the same security can trade in different currencies on different exchanges. Depending on the product, EUR listings are available on Xetra or Nasdaq Helsinki, and PLN listings on the Warsaw Stock Exchange. The selected listing's trading currency is shown on the broker's order page.

For example, a trade in a PLN listing using cash held in PLN does not require currency conversion for that trade. If the same investor uses PLN to buy a EUR listing, the broker may convert the cash and charge for doing so. Later changes in the exchange rate also affect what the EUR holding is worth in PLN.

Trading in EUR or PLN does not by itself mean that the product is currency-hedged. The underlying crypto-assets can still rise or fall in value when measured in that currency.

Why can tracking differ from the crypto price?

Virtune's ETPs are physically backed: the underlying crypto-assets are held with custodians as collateral for the securities. Each ETP represents a defined amount of those assets, and its calculated value is based on that amount and the assets' reference prices. This connects the ETP's value to the assets it tracks (backing and valuation).

Tracking difference is the difference between a product's return and the return of the asset or benchmark being compared over the same period and in the same currency. Virtune's fee reduces the asset entitlement over time. In staked products, rewards allocated under the product's terms work in the opposite direction by adding to that entitlement. Those rewards are variable; they do not establish a fixed net return after fees.

An intraday gap is a different comparison. A crypto price on a round-the-clock trading service is not necessarily measured at the same time as an exchange quote. The ETP's spread and a closed exchange can also explain why the number on a broker's screen differs from a crypto price elsewhere. How crypto ETPs work separates daily valuation from exchange trading.

Virtune's ETPs do not accrue interest. The staking guide explains how staking rewards enter a product instead.