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The European continent will get its first Bitcoin ETF public listing this month, after 12 months of delay from the planned launch.
Last year in July 2022, Jacobi Asset Management announced that its Bitcoin ETF will list on the Euronext Amsterdam exchange. However, a year later, the platform announced that it is ‘”on track” to launch this month, adding that the timing wasn’t right the last year.
Last year this time, the crypto market was already under intense stress with the collapse of the Terra ecosystem and the bankruptcies of crypto lenders and hedge fund Three Arrows Capital, following thereafter.
Now, the market is buzzing with Bitcoin ETF applications after the world’s largest financial giant BlackRock filed its spot Bitcoin ETF application. Jacobi Asset Management admitted that the “demand has shifted since last summer”.
Over Challenges of Launching Bitcoin ETF In Europe
All digital asset exchange-traded products (ETPs) in Europe have been structured as exchange-traded notes (ETNs) instead of funds. Here’s the differentiation between the two.
- ETFs are investment funds that can trade on an exchange like stocks. ETF shareholders own a portion of the fund’s underlying assets.
- ETNs are debt securities that track the price of an underlying asset, such as a digital currency. Investors in ETNs do not own the underlying assets.
Jacobi Asset Management has made a point of launching an ETF instead of an ETN. This is because ETFs are more transparent and liquid than ETNs. Thus, this is akin to the spot Bitcoin ETF in the US markets. The development comes soon after the SEC acknowledged the spot Bitcoin ETF application by Bitwise.
Michael O’Riordan, the founding partner of ETF and digital assets consultancy Blackwater Search and Advisory, said that launching a bitcoin ETF in Europe would be very challenging. This is because Bitcoin is not considered an eligible asset under Ucits rules. Speaking to Financial Times, O’Riordan added:
“However, in practice, apart from some structural differences, the ETF and the ETP are quite similar. As an industry, we have not done a good job at distinguishing each and as a result there is a lot of confusion in the market as to which is which”.
In the past year and a half, European digital assets ETPs received a total of $483 million in net flows, with $398 million flowing in during the third quarter of 2022 alone. Currently, the total assets in European digital assets ETPs amount to €4.3 billion. This is a decrease from the peak of €10.5 billion recorded at the end of 2021.
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