The upcoming spot Bitcoin ETF will offer a unique feature compared to previously launched Bitcoin ETNs. Shareholders will have ownership of a portion of the fund’s underlying assets.
After facing a delay of 12 months from the original planned launch, the first Bitcoin ETF public listing in Europe is set to take place this month. Jacobi Asset Management had announced in July 2022 that its Bitcoin ETF would be listed on the Euronext Amsterdam exchange.
However, they recently stated that they are “on track” to launch this month, explaining that the timing was not suitable last year.
Last year, the crypto market faced significant challenges, including the collapse of the Terra ecosystem and the bankruptcies of crypto lenders and hedge fund Three Arrows Capital.
However, the current market scenario is different as Bitcoin ETF applications have garnered attention. BlackRock, the world’s largest financial giant, recently filed its application for a spot Bitcoin ETF. Jacobi Asset Management acknowledged the change in demand since last summer.
Europe faces challenges in launching Bitcoin ETF:
In Europe, all digital asset exchange-traded products (ETPs) have been structured as exchange-traded notes (ETNs) rather than funds. Here’s the difference between the two:
ETFs are investment funds that can be traded on an exchange, similar to stocks. When you own shares of an ETF, you actually own a part of the underlying assets held by the fund.
On the other hand, ETNs are debt securities that track the price of an underlying asset, such as a digital currency. When you invest in ETNs, you do not own the underlying assets; instead, you hold a debt security that reflects the value of the asset it tracks.
Jacobi Asset Management has decided to launch an ETF instead of an ETN, emphasizing that ETFs offer greater transparency and liquidity compared to ETNs. This move aligns with the introduction of the spot Bitcoin ETF in the US markets. The announcement comes shortly after the SEC acknowledged the application for a spot Bitcoin ETF by Bitwise.
Michael O’Riordan, the founding partner of ETF and digital assets consultancy Blackwater Search and Advisory, expressed that launching a Bitcoin ETF in Europe would be difficult due to Bitcoin not being considered an eligible asset under Ucits rules. O’Riordan shared this perspective during an interview with the Financial Times.
O’Riordan also mentioned that, despite some structural differences, ETFs and ETPs are quite similar in practice. However, he acknowledged that the industry has not effectively differentiated between the two, leading to confusion in the market regarding their distinctions.
European digital assets ETPs attracted a significant amount of net flows, totaling $483 million over the past 18 months. During the third quarter of 2022 alone, $398 million flowed into these ETPs. Presently, the total assets in European digital assets ETPs stand at €4.3 billion, which has declined from the peak of €10.5 billion reached by the end of 2021.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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