Binance hack could be good for digital asset ETPs

Binance, the world’s largest cryptocurrency exchange, has reported that it has covered 90 per cent of the USD6.3 billion (GBP4.7 billion) in assets stolen in a hack on Thursday.

The firm says that the remaining 10 per cent may take longer to source. Joshua de Vos, Research Lead, CoinDesk, and author of our monthly Global Digital Asset Review, writes that the USD6.4 billion Binance hack, the largest in the history of digital assets, highlights the persistent counterparty and operational risks associated with centralised exchanges.

“So far in 2026, approximately USD6.8 billion in assets has been compromised across four exchange-related security incidents, although some of these funds have since been frozen or covered by the affected platforms. Meanwhile, the growing sophistication of cyberattacks, including the increasing use of AI-assisted phishing and social engineering, presents additional challenges for exchange security,” de Vos writes.

“We expect heightened concerns over exchange counterparty risk to strengthen the appeal of ETFs and ETPs as an alternative means of gaining digital asset exposure. These products allow investors to access digital asset markets through traditional brokerage accounts without directly managing private keys or maintaining balances on crypto exchanges.

“Recent exploits involving cold-storage hardware wallets have also highlighted the risks associated with self-custody. While spot-backed ETFs and ETPs remain exposed to the operational and security risks of their underlying custodians, institutional custody arrangements may offer a more attractive framework for investors seeking to reduce their direct exposure to these risks. Derivatives-based products provide another alternative, removing the need for direct custody of the underlying digital assets while introducing their own counterparty and tracking risks.

“2026 has been a challenging year for digital asset security, reinforcing the importance of custody arrangements and operational resilience in investment decisions. For investors seeking sizeable digital asset exposure, ETFs and ETPs may become increasingly attractive as established investment structures that reduce the need to manage digital asset custody directly.”