Bitcoin is attracting more and more attention from institutional investors, who see it as a way to diversify their portfolio and take advantage of its strong growth. However, investing in Bitcoin is not without risks and constraints, especially in terms of security, regulation and taxation. This is why some players in the financial market are seeking to offer simpler and more accessible investment products, such as ETFs (Exchange Traded Funds).
Spot ETFs: An Emerging Solution
In the case of Bitcoin, There are two types of ETFs: futures ETFs and spot ETFs. Futures ETFs are based on Bitcoin futures contracts, i.e. commitments to buy or sell Bitcoin on a date and at a price fixed in advance. Cash ETFs are based on the actual market price of Bitcoini.e. the price at which it trades at a given moment. Cash ETFs therefore imply that the fund manager actually hold bitcoin in its wallet, which requires a secure and regulated custody solution.
A First in Europe
So far, no spot Bitcoin ETFs had been approved or launched in Europecontrary to Futures ETFs, which have been available since 2020 on several European stock exchanges. But this just changed with the announcement made by Jacobi Asset Management, a London-based digital asset manager, which has launched the first European spot Bitcoin ETF on Euronext Amsterdam.
The ETF, baptized Jacobi FT Wilshire Bitcoin ETF (BCOIN)is offered in partnership with index provider Wilshire Indexes, which uses data from the Zumo crypto platform. The fund is regulated by the Guernsey Financial Services Commission (GFSC), which had approved it earlier in 2021. The bitcoins underlying the ETF are held by Fidelity Digital Assets, the crypto subsidiary of American giant Fidelity. Flow Traders, Jane Street and DRW act as market makers.
Innovation at the Service of Responsible Investment
According to Jacobi Asset Management, the ETF offers a Bitcoin investment solution aligned with ESG criteria (environmental, social and governance), by offsetting the carbon footprint of Bitcoin mining by the purchase of renewable energy certificates. The ETF also distinguishes itself from other existing products on the European market, which are exchange-traded notes (ETNs), by offering direct exposure to Bitcoin without counterparty risk or leverage.
With this launch, Jacobi Asset Management hopes to attract European institutional investors looking to integrate Bitcoin into their investment strategy, while benefiting from a simple, transparent and regulated product. Europe is thus ahead of the United States, where no spot Bitcoin ETF has yet been approved by the SEC (Securities and Exchange Commission), despite numerous applications filed by major players such as Fidelity or BlackRock.
Source: Jacobi AM, Decrypt