World’s First Centrally Cleared Bitcoin Exchange Traded Product to List in Germany

ETC Group will list the world’s first centrally cleared Bitcoin ETC, BTCetc Bitcoin Exchange Traded Crypto – (BTCE) on Deutsche Börse’s XETRA platform later this month. The exchange traded cryptocurrency (ETC) tracks the price of Bitcoin and is 100% physically backed, providing investors with a safe and transparent way to gain exposure to Bitcoin.

This is the first cryptocurrency product to launch on XETRA, the inaugural Exchange Traded Product (ETP) from ETC Group and the first cryptocurrency ETC to be available on HANetf’s white label ETP platform.

This structure gives investors several benefits over investing directly in Bitcoin. Traded on regulated markets, investors can buy and sell the ETC in the same way they would when trading conventional shares or ETPs, with the identical regulatory protections in place. CCP clearing is a feature that investors expect when trading on a regulated exchange and BTCE brings this standard to Bitcoin and cryptocurrency trading for the first time. Clearing through a CCP greatly reduces the counterparty risk when trading BTCE.

Approved by BaFin, the German financial regulator, BTCE is structured as an ETC that is physically backed by Bitcoin. Each unit of BTCE gives the holder a claim on a predefined amount of Bitcoin – a structure very similar to physically-backed gold exchange traded commodities, and allows investors the option for redemption in Bitcoin.  For every unit of BTCE, there is Bitcoin stored in regulated, institutional-grade safe custody. The entire ETC structure is based on a transparent and verifiable process to ensure that the provenance of all Bitcoin in custody has been strictly vetted.

Investors don’t need to engage with the technical challenges of purchasing and storing Bitcoin such as setting up a cryptocurrency wallet or trading on unregulated crypto exchanges and there is no need to manage cryptographic keys or engage with blockchain technology. Units of BTCE are safely held with an investor’s securities broker or bank, thus removing the risk of losing the investment because of, for instance, lack of knowledge of how cryptographic keys work.

BTCE is traded on one of Europe’s largest exchanges and is supported by a network of world class Authorised Participants (APs) and Market Makers, experienced in cryptocurrency markets as well as the ETP markets. The APs ensure on-exchange liquidity and tight spreads, enabling traders to purchase in all sizes without having to worry about market impact.

Trading will be centralised on XETRA, drawing liquidity from the many fragmented crypto exchanges. ETPs are at their most powerful when they democratise access to difficult-to-access asset classes. The Bitcoin ETP that can harness global liquidity in a robust and tried and tested product structure.

On March 2nd 2020, BaFin, the German Regulator confirmed that they now officially recognise cryptocurrencies as financial instruments, a significant step in the official recognition of the important role that cryptocurrencies have been playing in global markets in recent times.

Backed by a number of major London-based financial institutions, ETC Group brings together financial services professionals, with experience spanning both the worlds of digital assets and regulated markets with the goal to become the bridge between crypto and regulated markets, thus making investing in cryptocurrencies easier, safer and transparent.

BTCE will be distributed and marketed via HANetf’s unique white label ETF issuance business. HANetf is a fast growing, young business set up by ETF industry veterans. In its short time in existence, HANetf has issued Europe’s first cloud computing ETF and medical cannabis ETF. These unique offerings are clear evidence of the value-added nature of the ETPs HANetf helps set up, manage and distributes. BTCE will be an excellent addition to the stable of ETFs and ETPs HANetf already offers.

Investors can purchase BTCE through their regular broker or bank with access to XETRA, and individuals or institutions wanting to exchange their Bitcoin holdings directly for the product can do so via the network of Authorised Participants of the Issuer.  BTCE will also be passported to the UK, Italy and Austria. As with all exchange traded products, an investor’s capital is at risk.


Featured image credit: Unsplash

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