Deutsche Borse – a German stock market operator – recently announced the listing of a Bitcoin Spot ETN on its digital stock exchange “Xetra.” The product comes from Invesco, an American investment management company that filed for a Bitcoin futures ETF in the US in August but recently dropped.
Invesco’s Spot ETN
Deutsche Borse revealed the new product in a press release on Monday. Accordingly, the “Invesco Physical Bitcoin” ETN (ticker: BTIC) offers “physically secured access to Bitcoin performance.”
The ETN was admitted by the Regulated Market of the Frankfurt Stock Exchange and is centrally cleared through Eurex Clearing. This will provide “significantly reduced risks in the settlement of transactions,” as reads the announcement.
ETF Stream elaborated that the ETN’s total expense ratio is 0.99%. It tracks the CoinShares Bitcoin Hourly Reference Rate index to precisely deliver the price performance of its Bitcoin holdings. Those holdings will be secured by Zodia Custody in the UK – the crypto custody platform of Standard Chartered.
Gary Buxton – head of EMEA ETFs and indexed strategies at Invesco – said that the ETP would help provide institutional access to Bitcoin:
“Most of the discussions we have with clients are not really about bitcoin itself but more about the access to bitcoin and how you get comfortable with segregation, how you get comfortable with valuation. Really, one of the strengths of ETPs is as an access vehicle.”
Spot Over Futures ETP
Buxton further elaborates why he chose a spot-based Bitcoin product rather than a futures-based one. He expressed concerns over synthetic liquidity and how that may affect valuation over time. Alternatively, he found physically-backed Bitcoin to be a more “observable” product.
Alternatively, the Securities and Exchange Commission (SEC) has favored Bitcoin futures ETFs over Spot ETFs for months due to investor protection concerns. Invesco filed for such a futures product back in August but withdrew its application just hours before the product went live. A top executive at Invesco later explained that a futures product would harm investors by creating contango.