The first crypto ETF from The Netherlands
The first crypto ETF from The Netherlands

The first crypto ETF from The Netherlands

By Daniele Chicca - 7 Jul 2018

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The number one ETP trading platform in Europe based in Amsterdam launches first crypto ETF.

After the crypto-related futures, the investment funds also arrive. The number one ETP trading platform in Europe, the Dutch company Flow Traders NV, has announced the launch of the world’s first mutual fund linked to digital currencies.

As could be expected, the Exchange-Traded Product investment vehicle related to bitcoin and ether was not welcomed – to put it mildly – by national market regulators, advising investors not to invest their money on virtual currencies. , considered too volatile and risky.

The official opinion of the Dutch market control authorities is absolutely against investment in cryptographic coins. The AFM “discourages” in fact anyone – consumers, investors and companies – to use or bet on the crypto.

But regardless of the opinions of regulators, in recent months Flow Traders, based in Amsterdam, has “drastically” increased its trading activities of products supplied by XBT Provider, according to reports from the same Swedish group active in the crypto sector.

Crypto-related ETFs: The Netherlands are pioneers

Although five US companies in the sector have already begun to allow futures exchange with a crypto as an underlying, the Amsterdam-based company is the first ever to allow the purchase and sale of funds linked to cryptographic currencies listed on regulated financial markets.

Funds and securities should fuel interest in digital currencies: bitcoin and ether become asset classes that can be invested in a simple and straightforward manner.

In an interview with Bloomberg, CEO Dennis Dijkstra said that “people underestimate cryptocurrencies”: it is a big phenomenon and will be regulated “very soon”.

“Market operators are far more professional than you think. Institutional investors have shown great interest, we know this because we are receiving requests “in this sense.

“Crypto lend themselves to cases of abuse”

The regulators of the Dutch markets are not of the same opinion, however. An AFM spokesperson, Nienke Torensma, said in a statement to “discourage crypto-related activities to both consumers and traders with a trading license.”

Torensma notes that “because of the novelty and the potential anonymity that cryptocurrencies are able to offer, they lend themselves easily to cases of abuse“. As the authority does not believe that virtual currencies respond to currency functionality, as opposed to Flow Traders, they do not consider them as an asset class.

But Flow Traders is certainly not the only financial institution to have dived into the sector. Banks of the caliber of the US Goldman Sachs are about to establish digital asset trading desks, while the British Barclays has announced that it will offer banking services to Coinbase, the popular California crypto exchange platform.

Speed traders’ interest for crypto is growing

Despite the recent losses on the bitcoin markets (-55% in 2018) and other large capitalization cryptocurrencies, the interest of investors – small and large – has not decreased.

Indeed, just the exaggerated volatility has contributed to increase the appeal of the crypto, since the “speed trader” and speculators prefer the markets with the strongest price fluctuations.

The presence of contracts linked to the crypto on the CME and Cboe markets also allows Flow Traders to hedge itself against the risks deriving from its investment activities in the sector.

Specifically, the Dutch group exchanged ETF funds for a total value of 244 billion euros in the first quarter. Out of all of these 143 billion have changed hands in Europe: these are digits that make the company the first trader of securities and mutual funds.

Daniele Chicca

Graduated in foreign languages and literature at the University of Bologna, with a year of undergraduate at the UCL in London. A professional journalist since 2007, in time he specialized in finance, economics, and politics. After three years with Reuters in Milan, he worked for several newspapers, contributing among other things to an increase in progressive traffic on the website Wall Street Italy and offering services of various kinds for Radio Rai and press agencies AGI and TMNews (formerly Apcom). At the moment he is responsible for the drafting, the editorial line and the coordination of an important economic and financial information website.

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