Europe’s first spot Bitcoin ETF to debut soon

abdelaziz Fathi

Crypto asset manager Jacobi Asset Management is preparing to launch Europe’s first spot Bitcoin exchange-traded fund (ETF) after the Terra Luna crash and FTX collapse caused a long delay.

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.

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.

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.

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