VanEck has listed three crypto ETNs on the German exchange XETRA. The ETNs have Solana, Polkadot and Tron as underlying assets.
VanEck expands investment options with crypto ETNs
With this move, VanEck aims to expand cryptocurrency investment options for its customers. The three types of ETNs allow investors to gain exposure to the crypto market without buying cryptocurrencies directly, but by trading the assets on the classic financial market.
ETNs on Solana, Tron and Polkadot
VanEck has not chosen these three cryptocurrencies at random. The decision was guided by a careful study that took into account their use and operation, number of transactions and market capitalization.
Solana stands out for its speed: with 50,000 transactions per second and a negligible commission cost, it is one of the most scalable blockchains.
Tron also stands out for its speed and low commission costs. Most importantly, it has a consensus mechanism (DPoS) that makes it more efficient than Bitcoin and Ethereum and less energy-intensive. Moreover, it is one of the most popular blockchains in Asia, the continent from where it originated (it was founded in 2017 by Justin Sun, in Singapore)
Finally, Polkadot is characterized by its interoperability: it allows blockchains to communicate with each other.
What are ETNs
ETNs, not to be confused with ETFs, are specific investment products. Like ETFs, they replicate the value of the underlying asset and are tradable on exchanges. As far as cryptocurrencies are concerned, both products allow investors to invest in cryptocurrencies without buying them directly. This saves the investor from also having to worry about a custody service.
The main difference is that those who invest in ETFs buy a portion of the relevant fund. ETNs, on the other hand, are “credit notes” (ETN stands for Exchange Traded Note), whereby the investor is lending money to the issuer.
Compared to ETFs, ETNs become riskier instruments because they are correlated with the underlying asset, but their strength also depends on the strength of the issuer. In essence, if the issuer fails, the investor risks losing his capital, regardless of the value of the underlying asset.
ETFs, on the other hand, are funds in which the capital is separate from the issuer.
VanEck and the battle for Bitcoin ETFs in the US
VanEck is an investment management company that specifically focuses on ETFs. It had already launched ETNs in Bitcoin and Ethereum in the past, tradable on Euronext, SIX Swiss Exchange and Deutsche Boerse Xetra.
With the launch of the new ETNs, VanEck is expanding the possibilities of cryptocurrency trading on traditional markets, at least in Europe.
In the US, however, VanEck itself is struggling to get approval for its Bitcoin ETF.
VanEck has everything in place, even choosing Gemini as its custody service, but the long-awaited decision from the Securities and Exchange Commission is slow in coming.
VanEck has no choice but to look around for alternative markets such as Europe.