Crypto enthusiasts in Europe are closely observing the U.S. scenario, where the Securities and Exchange Commission (SEC) has authorized eleven spot bitcoin exchange-traded funds. This development is sparking a sense of FOMO (fear of missing out) among them. However, it’s important to remember that Europe already has a considerable number of similar products available.
Crypto ETPs in Europe
While the U.S. market is larger and carries the potential to drive more investments into Bitcoin, sparking excitement about the approval of a spot Bitcoin ETF, Europe has been ahead in terms of offering exchange-traded products (ETPs) to retail investors. European investors have had access to spot Bitcoin ETPs for quite some time, allowing them exposure to cryptocurrency. This indicates Europe’s progressive stance in the realm of cryptocurrency products.
A notable example is from May 2015, when Sweden’s XBT Provider AB announced the approval of Bitcoin Tracker One, a product of CoinShares. This was the first Bitcoin-based security available on a regulated exchange. Following this, in October 2015, they introduced a Euro-denominated Bitcoin-based security, Bitcoin Tracker EUR, accessible through Nasdaq Nordic.
Main Providers
The European market features several key players in the Exchange-Traded Products (ETPs) sector, including 21Shares, CoinShares, WisdomTree, VanEck, Valour, Invesco, Hashdex, and ETC Group. However, the likelihood of a Bitcoin ETF being listed in Europe is slim due to regulatory challenges. Laurent Kssis, a director at the financial services firm CEC Capital, clarifies that under the UCITS laws in Europe, a Bitcoin ETF is not a feasible option. This is because, by definition, an ETF is a collection of stocks providing diversification, where no single component exceeds 20% of the total allocation, a criterion that a Bitcoin ETF would not meet.
Crypto ETF and ETP Flows
On their inaugural trading day, U.S. spot bitcoin ETFs witnessed an impressive turnover, accumulating over $4 billion in trading volumes. Among these, BlackRock’s ETF accounted for approximately one-fourth of these volumes. Meanwhile, the Grayscale Bitcoin Trust (GBTC), which transitioned into an ETF, represented nearly half of the trading volumes. Bloomberg Intelligence analyst Eric Balchunas shared insights on Twitter about this event, noting that there were 700,000 individual trades involving the 11 spot ETFs on that day. To put this in perspective, he compared it with $QQQ, which, although it handles larger dollar volumes due to its usage by bigger investors, saw only half the number of trades. Balchunas pointed out that this high level of trading activity, which surpassed expectations, indicated a significant grassroots involvement rather than just large initial investments, a positive sign for the ETFs’ reception.
ETPs and ETFs Listed Globally Gain Momentum
According to ETFGI, an independent research and consultancy firm focusing on trends in the ETF space, the number of Crypto ETFs and ETPs listed around the world saw a significant increase of 119.6% during the first 11 months of 2023.
In November of the previous year, these global crypto ETFs and ETPs attracted net inflows amounting to $1.31 billion, which brought the year-to-date net inflows to a total of $1.60 billion. In Europe specifically, crypto ETPs listed in Germany and Switzerland experienced notable inflows. German-listed crypto ETPs saw inflows of $663 million, while those in Switzerland attracted $434 million in 2023. These inflows represent 22% and 13% of their respective assets under management (AUM), as reported by ETF Stream.
