Deutsche Borse, a German stock exchange operator, recently announced the listing on its digital stock exchange “Xetra” of a Bitcoin Spot ETN. The product is from Invesco (an American investment management company) that applied for a Bitcoin futures ETF to be listed in the US in August. However, it was recently cancelled.
Deutsche Borse announced the new product Monday in a press release. The “Invesco Physical Bitcoin ETN” (ticker: BTIC), offers “physically secure access to Bitcoin performance.”
The Regulated Market of Frankfurt Stock Exchange admitted the ETN and it is centrally cleared by Eurex Clearing. According to the announcement, this will reduce “significantly the risks of the settlement of transactions.”
ETF Stream stated that the ETN’s total cost ratio is 0.99%. To accurately deliver its Bitcoin holdings’ price performance, it tracks the CoinShares Bitcoin Hourly Refer Rate index. These holdings will be protected by Zodia Custody UK – Standard Chartered’s crypto custody platform.
Gary Buxton, head of EMEA ETFs & Index Strategies at Invesco, stated that the ETP would allow institutional access to Bitcoin.
“Most discussions with clients do not concern bitcoin, but rather about how to access bitcoin, how to get comfortable segregation, and how to get comfortable valuation. ETPs are a great access vehicle.
Spot Over Futures ETP
Buxton also explains why he decided to use a spot-based Bitcoin product over a futures-based. Buxton expressed concern about synthetic liquidity and how it may impact valuation over time. He found that physically-backed Bitcoin was a better product.
The Securities and Exchange Commission (SEC), on the other hand, has preferred Bitcoin futures ETFs to Spot ETFs for months because of investor protection concerns. Invesco applied for such a product in August, but it withdrew its application shortly before the product was launched. Invesco’s top executive explained later that futures products would create contango, which could be detrimental to investors.
Marla Brooks – Financial Analysis
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