London-based investment firm ETC Group is going to list the Bitcoin Exchange Traded Crypto (BTCE) product on Deutsche Börse’s Xetra market.
The German financial authority BaFin announced in March that cryptocurrencies will be recognized as a financial instrument, this concession has spurred the London based investment firm ETC Group to plan to list a Bitcoin-backed security on a German trading platform. This listing is scheduled later this month. According to a release seen by coin watchers on Tuesday, Bitcoin exchange-traded Crypto (BETC) is an exchange-traded product (ETP) scheduled for approval on Deutsche Börse’s Xetra, a Frankfurt-based platform.
The product is backed by Bitcoin so it provides the rights for a claim to a specific amount of the crypto. Its central clearing essence is to secure counterparty credit risk. Speaking on its mode of operation, the company said that its digital asset shall be stored using cold storage. This means that the wallet shall not be accessible through the internet for security purposes. The California-based custodial service BitGo is responsible for securing Bitcoin.
Investing in Bitcoin in a Regulated Environment on Xetra
ETFs enable investors to benefit from trading of financial instruments with the option of assets redemption if they choose to do so. The primary advantage is that the investors could take advantage of the market without actually holding bitcoins. In a statement by Bradley Duke, the CEO of ETC Group released to the media he said that it is a hybrid ETP even though it has some features of an ETF. The reason it falls short of qualification being classified as an ETF is its single asset feature.
Based on the European regulatory regime the new security would cost more than a traditional ETF at 2% which is quite higher than 0.5 to 0.7% obtainable with most ETFs.
Third Party Distribution Service
According to the company introducing such a product to a regulated market is an onerous task and this could be seen from the premium. HANetf has been saddled with the responsibility of distribution of the security. Among other products of the company are cloud computing ETF and a medical cannabis ETF.
Aside from Germany users and investors in the UK, Austria and Italy would be able to access hold or trade the BTCE .
Bitcoins backed ETFs give owners a clean of a specified volume of the digital asset even though they do not hold them physically. This is the essence of the custodial service provided by BitGo. The holders are able to long or short the cryptocurrency.
Chuks is a blockchain enthusiast and finance researcher that has covered the crypto sphere for several years. He believes that the evolving technology would change how we do business.
