Cryptocurrencies are assets that can be held in a variety of ways. A more direct form of ‘holding’ would involve opening an account on one of the exchanges supporting a currency or using a special wallet. There are still question marks about who owns the underlying assets or what your rights are and whilst that is indeed the nature of the beast, there are other ways to get exposure to the crypto markets that come with a degree more certainty.
Most of the big brokers offer some kind of market in cryptocurrencies. If you already have an account with one of them then this might be a good place to start. Some brokers are marking out a niche for themselves by offering a wider range of markets across the different cryptocurrencies.
Trading the crypto markets means you do not actually own the underlying instrument. If you’re trading crypto using CFDs then your holding will be in derivative form and reflect the changes in price that come with the underlying crypto. If you’re spread betting then again you won’t actually hold the position but will have a relationship with a broker that makes the spread bet market on which you can take a view.
IG Index offer both CFD and Spread bet markets in cryptocurrencies. The product range extends to: Bitcoin, Ether, Litecoin, Ripple, Bitcoin Cash, EOS, Stellar, NEO.
So, as with any derivative product the ‘safety’ of your holding relates to the trustworthiness of the broker that you hold your account with. Luckily our example (IG Index) scores very highly in this regard. Incorporated in the UK it is regulated and authorized by the Financial Conduct Authority (FCA) in the UK and also signed up to the FX Global Code of Conduct which indicates its willingness to promote broker best practice. If you move away from the bigger brokers you’ll probably note that one or two pillars of their business don’t look quite as strong.
The ability to short sell cryptocurrencies on spread bet or CFD means you can move away from ‘buy and hold’ style holdings. Trading profits are by no means guaranteed but do ensure your broker is in a position to pay out should they be achieved.