Europe’s First Bitcoin ETF to Launch Amidst Renewed Institutional Interest

Europe's First Bitcoin ETF to Launch Amidst Renewed Institutional Interest

The long-awaited debut of Europe’s inaugural bitcoin exchange-traded fund (ETF) is set to become a reality. Jacobi Asset Management is on the verge of launching the Bitcoin ETF this month. 

Despite numerous hurdles over the past year, Jacobi’s Bitcoin ETF approach offers a unique value proposition and hopes to change the dynamics of cryptocurrency investment in Europe.

Jacobi Asset Management’s Bitcoin ETF was initially planned for a July 2022 launch on Euronext Amsterdam but was delayed amidst turbulent market conditions, including the Terra/Luna cryptocurrency crash and the collapse of crypto exchange FTX.

Despite the setbacks, the firm now confirms that the fund is on the launch pad and expected to debut this month. The shift in market demand and the rebound of bitcoin, crossing $30,000 for the second time in 2023, has helped to revive the initiative.

Bitcoin ETF investments

European investors are often restricted to exchange-traded products (ETPs) structured as exchange-traded notes (ETNs) for their digital asset investments. This new Bitcoin ETF promises to change that. 

Peter Lane, co-founder and COO of Jacobi has criticized the prevailing misuse of the ETF terminology by ETN issuers, arguing that it obscures the inherent risks involved in ETN investments. He emphasized that, unlike ETNs, the ETF does not use leverage or derivatives, reducing significant counterparty risks.

Jacobi’s Bitcoin ETF has been authorized by Guernsey a jurisdiction known for its adaptability and support for fund launches. David Crosland, a partner at offshore law firm Carey Olsen, lauds Guernsey’s willingness to comprehend the complex specifics, enabling a fund vehicle to enjoy regulated fund status. 

This adaptability has been crucial given the considerable regulatory challenges of launching a Bitcoin ETF in Europe. Michael O’Riordan, founding partner of ETF and digital assets consultancy Blackwater Search and Advisory, noted that Bitcoin is not an eligible asset under Ucits rules, adding to the complexities of such a launch.

Market impact and investor interest

The listing of the new Bitcoin ETF has the potential to significantly influence European digital assets, according to people familiar with the matter. Data from Coinbase and Bloomberg indicates that net flows into these ETPs have reached $483 million over the past year and a half, with the assets peaking at €10.5 billion at the end of 2021.

The ongoing enthusiasm for Bitcoin ETFs extends beyond Europe. In the US, BlackRock, Invesco, and Fidelity submitted applications to launch their own Bitcoin ETFs. The entry of these traditional finance (TradFi) players has sparked a renewed interest in cryptocurrencies among institutional investors. If approved, these spot Bitcoin ETFs would provide investors direct access to trade bitcoin through their brokerage accounts, further propelling the mainstream acceptance of the world’s largest cryptocurrency.

The launch of Europe’s first Bitcoin ETF represents a milestone in the journey of cryptocurrencies. While considerable challenges persist, the entry of heavyweight firms into this space indicates a significant shift in market sentiment. Bitcoin ETFs could bring about a new era in digital asset investment as the global financial landscape evolves.

Image credits: Shutterstock, CC images, Midjourney, Unsplash.