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 fees for crypto exchange-traded products (ETPs) cost four to six times more than fees for 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%.

That means the expense ratio for a single-asset crypto ETP on average is 4.6 times more than that for a custodian, and a multi-asset ETP is six 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 Anchorage, Bitcoin Coinbase and Gemini, 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:

Some 53 single-asset ETPs were included in the study. Those included products from 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 such providers as Grayscale, 21Shares, FiCAS, Iconic Holding, Bitwise and 3iQ. (Grayscale and CoinDesk share a parent company, Digital Currency Group.)

Smith said Finoa has non-disclosure agreements with three or four large financial institutions and the mood is moving toward direct crypto exposure, given the possibility to put those assets to work on a decentralized finance (DeFi) platform, 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 said 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.”