Approval of Bitcoin ETFs in the US raises questions about its status in Europe.
The situation surrounding Bitcoin ETFs in Europe differs from that in the United States, where the adoption of Bitcoin spot and futures ETFs has been more prevalent. Bitcoin ETFs have been a highly discussed topic for months, as the approval of ETFs based on actual Bitcoin in the US could attract significant funds from Wall Street institutions and potentially drive up the price of Bitcoin.
Bitcoin ETFs function similarly to traditional ETFs, with financial institutions issuing and managing the funds on behalf of investors. These ETFs can be structured in different ways, such as holding Bitcoin futures or physical Bitcoin as the underlying asset. The ETF issuer manages the asset on behalf of the investor, and investors directly own a portion of the underlying Bitcoin. As the price of Bitcoin fluctuates, the value of the ETF changes accordingly.
One notable advantage of Bitcoin ETFs is that they are traded on regulated securities exchanges, making them accessible to a wide range of investors. This eliminates the need for technical knowledge in securely storing crypto assets and allows investors new to cryptocurrencies to gain exposure to Bitcoin without needing a crypto wallet or engaging in trading on a cryptocurrency exchange platform.
In addition to ETFs, there are also exchange-traded products (ETPs) available in regulated investment markets. These ETPs, including those for Bitcoin, Ethereum, and Litecoin, provide investors with access to digital tokens. Europe, in particular, has been progressive in terms of cryptocurrency products, with spot Bitcoin ETPs existing in the region for a long time.
Europe’s first Bitcoin ETF, the Jacobi FT Wilshire Bitcoin ETF, was launched in August 2023 on the Euronext Amsterdam exchange. This green ETF from Jacobi Asset Management aligns its goals with the European Union’s aspirations for sustainable blockchain innovation. The ETF has a built-in solution for renewable energy certification, allowing institutional investors to access the benefits of Bitcoin while achieving ESG goals.
Despite the progressive stance on cryptocurrency in Europe, it is unlikely that spot Bitcoin ETFs will achieve the same level of success seen in the US. European investors tend to have a more conservative investment approach, and exchange-traded products (ETPs) that behave like ETFs are already familiar on the continent. However, if the US market sets a positive example, it is possible that spot Bitcoin ETFs may emerge in Europe in the future.
Overall, Europe’s approach to Bitcoin ETFs differs from that of the US, but the potential for growth and development in the region remains.
