The Launch of Europe’s First Bitcoin ETF: time to boost the crypto acceptance in the continent
Recently Jacobi Asset Management has announced it will launch a European spot Bitcoin Exchange-Traded Fund (ETF) this July. The first EFT of this type in Europe fund will be named the Jacobi Bitcoin ETF and listed on Euronext Amsterdam Exchange.
CEO of Jacobi commented: “The Jacobi Bitcoin ETF will enable investors to access the underlying performance of this exciting asset class via a well-established and trusted investment structure.” Thus, European institutional and professional investors will be able to invest in bitcoin and the cryptocurrency market through the fund for a 1.5% annual management fee under the ticker BCOIN.
The importance of this move cannot be underestimated. The arrival of Europe’s first spot ETF is an excellent step for cryptocurrency accessibility in Europe. Even with Bitcoin operating at nearly its historical bottom value, it could be an excellent opportunity for those who are optimistic about BTC’s future cyclical rallies to invest into the asset.
A Bitcoin ETF is an exchange-traded fund comprised of Bitcoin or assets related to Bitcoin’s price. They are traded on a traditional exchange instead of a cryptocurrency exchange. How does it work? First Bitcoin is purchased by the company, then securitized, and later sold or traded on an exchange. However, the Security and Exchange Commission (SEC) has been rejecting multiple proposals, so there is no cryptocurrency ETF directly representing an underlying coin.
Currently, the underlying assets within Bitcoin ETFs are linked to Bitcoin futures contracts traded on the Chicago Mercantile Exchange. The last trading date for Bitcoin futures contracts is the last Friday of the contract month. The index rolls monthly and distributes the weights 20% each day over a five-day roll period.
A spokesperson for Euronext confirmed that BCOIN will be the first spot Bitcoin ETF, or the first fund directly investing in Bitcoin ever listed on Euronext. “All other currently existing products on our segment are exchange-traded notes, or legally structured as debt instruments,” he explained in an official statement. While it is known for sure that the ETF will arrive in July, Euronext did not provide a specific date for the launch.
There are other exchange-traded products in Europe, but Euronext’s product is the first spot or physical-backed Bitcoin fund. The fund is not allowed to stake, lend or leverage any of the assets it owns, so for the first time European investors buying an exchange-traded Bitcoin product will own the units that actually own the Bitcoin.
By launching the Bitcoin ETF the company is striving to remove the barrier to entry for those investment firms that have mandates to invest in regulated products only. Hopefully, it will therefore increase adoption of digital assets and bring more stability and less influence from the whales. Contrary to popular belief, the latter is very far from being an integral feature of the crypto industry.
Although European ETF investing is far less developed than in the United States, the accommodation of cryptocurrencies in a more traditional investing format is likely to be a popular move on the continent. Currently, only around 15 to 20 percent of retail investors in Europe use ETFs, which is almost two times less than those of the US where around 40% of the investors regularly deal with exchange-traded funds. It is obvious that there’s considerably lower trading volumes rotating at exchange-traded funds in Europe, all the more it means that the Jacobi Bitcoin ETF is likely viewed as an opportunity to breathe new life into the market by the European Commission. It’s also interesting that while Europe is on the verge of welcoming its first spot Bitcoin ETF, the United States continues to reject such applications. Thus, on June 29, crypto investment giant Grayscale filed a lawsuit in U.S. Court of Appeals against the U.S. Securities and Exchange Commission after its application to convert its Grayscale Bitcoin Trust into a spot-based Bitcoin ETF was denied. Nevertheless, ProShares launched the first short bitcoin-linked ETF in the U.S. on June 21 which happened past eight months after establishing the first U.S. bitcoin futures ETF. The ProShares Short Bitcoin Strategy, which is being traded on the New York Stock Exchange under the ticker BITI, is designed to give investors a way to profit from declines in the price of the cryptocurrency at an expense ratio of 0.95% (while the gross expense ratio makes 0.97%). The company now handles the two largest Bitcoin ETFs in the United States.
Although the market surrounding cryptocurrencies has been suffering from the beginning of 2022, the arrival of the Jacobi Bitcoin ETF is likely to see plenty of traffic with numerous recovery opportunities. The move to allow a spot Bitcoin ETF in Europe will likely give institutions such as pension funds, mutual funds, and insurance companies a pathway into Bitcoin that was currently unavailable. Jacobi founder and CEO Jamie Khurshid believes that the new Bitcoin ETF launch will help bring more stability to the crypto market amid a massive sell-off. For Europe as a whole, the continent’s first spot Bitcoin exchange-traded fund is a monumental step towards widespread crypto acceptance. There is a potential for a spot Bitcoin ETF to be extremely popular in Europe, given the lack of alternative options for Bitcoin investments through traditional means.