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German investors will soon have one more crypto-asset option to take into consideration. The ETC Group, an investment firm based in London, recently announced plans to list a bitcoin exchange-traded product on a German bourse later within this month.
In an announcement made on Tuesday, ETC Group said that it would soon launch a bitcoin-backed security called the Bitcoin Exchange Traded Crypto (BTCE). The product will be listed later this month on Frankfurt’s Deutsche Borse’s Xetra market.
Once launched, BTCE will also become the world’s first centrally cleared derivative crypto asset. European derivatives market use central clearing to firm up an asset’s stability because of a financial institution taking on a counterparty credit risk.
Being backed by bitcoin, ETC said that each BTCE holder has a claim to a specific amount of the token, although the exact amount was not yet revealed at the moment. To company also said that the actual bitcoin will be secured by storing the tokens in a cold vault in BitGo, a firm located in Palo Alto, California.
The product is projected to cost slightly higher than traditional ETFs as it will have an expense ratio of 2 percent rather than the usual 0.5 to 0.7 percent. “Bringing a product like this into regulated markets is not an easy task, and this is reflected in the premium,” ETC explained.
ETC Group CEO Bradley Duke highlighted one of the advantages of the product is that its flexibility. “Investors get the benefit of trading and owning bitcoin through a regulated security, while having the option to redeem bitcoin if they choose,” Duke said in a statement.
“It really is a hybrid ETP product that has the same features as an ETF [exchange-traded product],” the ETC Group CEO explained further. “Because it’s a single asset instrument it doesn’t qualify to be an ETF according to the European fund regime.”
BTCE will be distributed on the HANetf platform and will be available in Germany. However, the company added that it has also been passported to Austria, Italy, and the UK so users from these countries will be able to trade on the bitcoin-backed security as well.
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