How to Safely Invest in Cryptocurrencies and Digital Assets

Digital assets present attractive growth opportunities, but they also carry volatility and regulatory uncertainty. For high-net-worth investors, the key is to prioritize regulated vehicles, strong custody solutions, and disciplined risk management. This guide outlines practical strategies to help you invest in cryptocurrencies and digital assets with confidence.

1. Use Regulated Exchange-Traded Products

The growth of crypto exchange-traded funds (ETFs) is improving investor access. New approvals expected in 2025 include:

• Bitcoin ETFs with derivative components

• ETFs participating in staking on proof-of-stake networks

• Multi-asset crypto index products

These ETFs operate under established securities laws, with transparent pricing, audited custody, and regulatory oversight. By investing through regulated ETFs, you avoid direct custody risks while gaining diversified exposure.

2. Diversify via Tokenised Funds

Tokenised investment funds combine traditional fund structures with blockchain technology. Investor capital is pooled, and digital tokens represent ownership stakes. Examples already include tokenised money-market funds and funds investing in private equity, public equities, and debt.

Tokenisation enhances liquidity, improves transferability, and remains within securities regulations. For investors seeking exposure to illiquid assets without direct operational burdens, tokenised funds are a strong alternative.

3. Monitor Stablecoin Legislation

Stablecoins pegged to the U.S. dollar can offer a low-volatility entry point into digital assets. Pending legislation in Congress aims to establish a clear legal framework. Once in place, adoption could expand across:

• Payments

• Cross-border transactions

• Liquidity management

Investors should select stablecoins issued by reputable entities and held in regulated accounts or ETFs.

4. Choose Reputable Custodians and Segregate Assets

Whether through ETFs or direct crypto holdings, custody practices are critical. Prioritise products that employ qualified custodians with robust security protocols and insurance. For direct holdings, use hardware wallets or institutional-grade custody solutions with cold storage and multi-signature authorization. Keep digital assets segregated from other portfolios to reduce systemic risk.

5. Employ Professional Advice and Diversification

Digital assets should remain a portion of a broader diversified portfolio. Best practice includes:

• Working with advisors who understand blockchain and regulation

• Limiting exposure to any single token or speculative theme

• Avoiding overexposure to high-risk memecoins despite hype

By incorporating digital assets via ETFs, tokenised funds, and stablecoins, investors can balance innovation with stability.

Conclusion: Safe Pathways to Innovation

Investing in digital assets requires prudence, structure, and oversight. Leveraging regulated ETFs, tokenised funds, stablecoins, and professional custody can unlock innovation while reducing volatility.

Paulson & Partners supports clients in evaluating crypto products, selecting custodians, and integrating digital assets into holistic investment strategies. Contact us today to build a secure and strategic digital-asset portfolio.