Europe moves head of US with launch of first spot Bitcoin ETF
Crypto asset manager Jacobi Asset Management has launched Europe’s first spot Bitcoin exchange-traded fund (ETF), nearly two years after securing initial approval for the endeavor.
The open-ended fund will provide exposure to the underlying performance of Bitcoin without handling the assets directly. The exchange-traded fund is open for accredited investors only and applies a minimum subscription fee of $100,000.
Originally scheduled to be listed on the Euronext Amsterdam exchange in July 2022, under the ticker BCOIN, the debut was postponed due to unprecedented market conditions such as the collapse of the Terra ecosystem and the insolvency of crypto exchange FTX.
Jacobi Asset Management has now decided to move forward with the ETF launch, citing a gradual shift in demand compared to the previous year. The asset manager, which received approval from the Guernsey Financial Services Commission (GFSC) in October 2021, is currently assessing the launch and is expected to announce a specific date soon.
CEO of Jacobi Asset Management, Martin Bednall said: “It is exciting to see Europe moving ahead of the US in opening up Bitcoin investing for institutional investors who want safe, secure access to the benefits of digital assets using familiar and regulated structures like our ETF. Unlike other products in the European market which are debt instruments, our fund owns the underlying asset directly. Jacobi is proud to be supported by Tier1 partners at the forefront of this digital asset market evolution whilst also pioneering an innovative, environmentally sound solution for European investors.”
Mark Makepeace, CEO of Wilshire Indexes, added: “The launch of the Jacobi FT Wilshire Bitcoin ETF is an important milestone for the digital asset industry and a transformative moment for the global financial industry. We are excited about the partnership with Jacobi and, as a leader in the development of institutional grade digital asset benchmarks, we are committed to helping accelerate the advancement of the entire digital asset ecosystem.”
What sets the Jacobi Bitcoin ETF apart is that it is a centrally cleared crypto-backed financial instrument, with custody support provided by Fidelity Digital Assets. This marks a shift from the usual structure of exchange-traded notes (ETNs) for crypto-backed traditional financial instruments in Europe.
ETF shareholders have direct ownership of a portion of the fund’s underlying assets, which could include securities, commodities, or other financial instruments. On the other hand, ETN investors own a debt security issued by the issuer, with the returns typically linked to the performance of a specific index or asset.
Another distinction pertains to leverage and the use of derivatives. ETFs typically do not employ leverage or utilize derivatives extensively, as doing so could introduce risks of market manipulation. ETNs, however, may incorporate leverage or derivatives into their structures, which can expose investors to additional risks and complexities.
Jacobi Asset Management opted to register its Bitcoin ETF product in Guernsey, a British crown dependency and island. This provided European regulators more flexibility in granting approval for the fund. However, Guernsey’s regulatory framework includes specific laws that prohibit traders from utilizing Jacobi’s ETF in leveraged or derivative trading activities.
Fidelity’s cryptocurrency investment arm will provide custody for the ETF, which Jacobi plans to list on Cboe Europe, subject to the Financial Conduct Authority (FCA) approval. While Fidelity Digital Assets continues to be solely focused on institutional customers, this is one of the first custody service agreements that the fund manager has made public.
Jacobi Asset Management kicked off its operation in May 2021 and is headed by former Goldman Sachs investment banker Jamie Khurshid.