Yesterday, the ETC group announced the launch of BTC1, a global ETP on Bitcoin (BTC) listed on Deutsche Börse XETRA.
This is a new ETP on Bitcoin designed for long-term investors focused on the benchmark.
Summary
The new ETP on Bitcoin (BTC) listed on Deutsche Börse
The ETC Group Core Bitcoin ETP (ticker BTC1; ISIN DE000A4AER62) is an Exchange-Traded Product specifically designed for long-term buy-and-hold investors, and for global institutional investors with extensive liquidity and risk management needs.
The ETC group has already launched several similar tools in the past, managing now an AUM of over one and a half billion dollars.
BTC1 has a Total Expense Ratio (TER) of 0.30%, thus offering a competitive advantage in terms of cost efficiency in the European market. Focused on the benchmark, it tracks the benchmark of institutional-level Bitcoin prices using CF Benchmarks, ensuring accuracy and reliability in tracking BTC price movements.
This is a global spot product that provides a lot of liquidity in the primary market, thus filling the spot liquidity of the US, European, and Asian markets during different trading windows.
It uses a unique Tri-NAV methodology, which provides institutional investors with an extended window of primary market liquidity covering BTC spot liquidity on different markets.
Therefore, in addition to the classic stock exchange opening hours, the issuer provides for three price determinations during the day (instead of just one), to expand the liquidity of the primary market also in other time zones.
This means that institutional investors can trade their holdings for a longer period than any other regulated vehicle on the global primary market Bitcoin spot.
According to ETC Group this makes BTC1 the first global spot ETP on Bitcoin.
BTC1 will be tradable on both XETRA and many other platforms, and will be added to HANetf’s pan-European ETP distribution platform.
ETC Group
ETC Group offers high-level investment products in the digital asset sector, domiciled in Germany.
Their Exchange Traded Products are physically backed, and act as a bridge between the traditional regulated financial market and the crypto market. So far, they have issued ETPs on Bitcoin, Ethereum, and other important cryptocurrencies.
In June 2020, the company launched the first Bitcoin ETP in Europe with centralized clearing on the market, issued in Germany and always listed on the German stock exchange XETRA, the largest ETF trading market in Europe.
Even BTC1 is issued in Germany, with primary listing on XETRA, 100% physical coverage and full fungibility with the underlying asset.
ETC Group holds digital assets at Zodia Custody, one of the leading European providers of institutional-grade cold wallet custody, with banking-level compliance and governance framework.
The CEO of ETC Group, Tim Bevan, has stated:
“At ETC Group, we want to advance the cryptocurrency investment sector and the launch of BTC1 represents a unique proposal. With BTC1, we are introducing the first globally oriented Bitcoin ETP to the market, with extended liquidity and risk management features that our clients need. We are proud to be the first to launch another market and believe that BTC1 has the potential to uniquely serve institutional investors with the best features in the category.”
The Product Manager of ETC Group, Chanchal Samadder, added:
“BTC1 represents a significant milestone in the evolution of Bitcoin investment products. Designed with benchmark-conscious and long-term investors in mind, BTC1 offers a unique blend of cost efficiency, accuracy, and extended primary market liquidity, setting a new standard in the Bitcoin ETP market.”
The CEO of Zodia Custody, Julian Sawyer, commented saying:
“It’s one breakthrough after another with our innovative colleagues at ETC Group. BTC1, just launched, represents exactly what institutions have been looking for when increasing the adoption of digital assets, and we are doing our part to ensure they can do so with the highest security and compliance through bank-level custody. Together, we continue to be at the forefront of building a truly solid ecosystem for a mature digital asset sector”.
Deutsche Börse XETRA and the new ETP on Bitcoin (BTC)
Deutsche Börse is the company that operates the Frankfurt Stock Exchange, and XETRA is its fully electronic trading platform on which 90% of stock trades in Germany take place.
The Frankfurt Stock Exchange was actually founded in 1585, and XETRA is now one of the largest stock exchanges in the world and the third in Europe.
Deutsche Börse was created only in 1992, but in continuity with Frankfurter Wertpapierbörse, the company created just two years earlier to manage the Frankfurt Stock Exchange.
On the official XETRA website, in addition to all traditional investment products, there is now also a specific section dedicated to crypto ETNs.
Regarding BTC1, they state that this new ETN allows investors to obtain low-cost exposure to Bitcoin, and that it uses the institutional reference rate of the Bitcoin CF from CME (BRR) as the benchmark market for the spot price of BTC.
They also declare that BTC1 is physically guaranteed and admitted to the regulated market of the Frankfurt Stock Exchange.
Benchmark and liquidity
The benchmark and liquidity are important for this type of products, because liquidity on Bitcoin is fragmented across many exchanges, which complicates price determination for investors.
For this reason, they wanted to develop a more robust benchmark that aggregates this liquidity, and that uses the BRR index and its US and Asian variants BRRY and BRRAP.
BTC1 leverages all three regional variants of this benchmark, allowing institutional investors to monitor the price of Bitcoin accurately and securely, ultimately providing access to three liquidity pools over a 14-hour period (compared to the traditional 8-hour window for all other ETFs and ETPs).
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