Spot Bitcoin ETF Set for Europe Debut This Month
Spot Bitcoin ETF, Europe’s first bitcoin exchange-traded fund, is scheduled to go public this month following a one-year delay, as announced by Jacobi Asset Management.
Initially slated for listing on Euronext Amsterdam in July 2022, the fund’s launch was postponed due to concerns stemming from the Terra Luna cryptocurrency crash in May 2022 and the collapse of cryptocurrency exchange FTX in November. Jacobi Asset Management now confirms that the ETF is “on track” for its launch, citing the evolving demand for such products since last summer.
In Europe, digital asset exchange-traded products have predominantly been structured as exchange-traded notes (ETNs) rather than funds. While ETF shareholders own a stake in the underlying shares of a fund, ETN investors hold a debt security rather than direct ownership of the underlying assets.
Jacobi emphasizes this distinction by asserting that it is introducing an ETF, not an exchange-traded note. Peter Lane, co-founder and chief operating officer of Jacobi, criticized structured note issuers, accusing them of “misusing” the ETF label in a previous statement to Ignites Europe.
The Jacobi Bitcoin ETF marks a significant departure from the customary practice of using exchange-traded notes (ETNs) for crypto-backed financial instruments. It adopts a centrally cleared structure with custody support provided by Fidelity Digital Assets.
In Europe, all traditional financial instruments backed by cryptocurrencies have been structured as ETNs rather than funds until now.
The key difference between an ETN and an ETF lies in ownership. ETF shareholders have a stake in the underlying assets of the fund, whereas ETN investors hold debt securities. Unlike ETNs, ETFs do not permit leverage or the use of derivatives, mitigating potential risks associated with market manipulation.
“There has been so much misinformation and misuse of the term ETF by [ETN] issuers, presumably to obfuscate the risks that are inherent in acquiring and investing in ETNs,” said Peter Lane, Co-Founder and CEO of Jacobi, to Ignites Europe last year.
Despite Europe’s successful approval of its first spot Bitcoin ETF in October 2021, the United States Securities and Exchange Commission (SEC) has consistently rejected all spot Bitcoin ETFs so far.
However, in 2023, several prominent institutional players, including BlackRock and Fidelity, have submitted new applications for spot Bitcoin ETFs, aiming to secure the distinction of being the first U.S.-approved ETF of this kind. It is noteworthy that the SEC had granted approval for a couple of futures Bitcoin ETFs in 2021.
Read about Blackrock’s application here.
Read about Fidelity’s application here..
Exciting times continue on the institutional adoption front for Bitcoin.
