It appears that Europe approved the first Bitcoin spot ETF. That’s great news. With this accomplishment, Europe beats the US for approving Bitcoin ETFs. But, what is an ETF and are there differences in Europe about ETFs?
Let’s dive in a bit deeper and see what’s up with the European Bitcoin ETF story.
🚨 BREAKING: 🇪🇺 Europe just beat the 🇺🇸 U.S. in the #Bitcoin race 😳
Europe's FIRST ever spot Bitcoin ETF just went LIVE 🚀
A Thread 🧵 pic.twitter.com/NZbDSTmvFk
— Keyur Rohit (@CryptoKingKeyur) August 16, 2023
What Is a Bitcoin ETF?
The crypto space has recently been heating up over the Bitcoin ETF. The US saw various Bitcoin spot ETF applications. Now it appears that Europe approved its first Bitcoin ETF.
An ETF is an exchange-traded fund. In other words, you can buy into Bitcoin, without owning any Bitcoin. So, there’s a fund that uses Bitcoin as the underlying asset. You can buy shares or units of that fund. The ETF reflects the value of the underlying asset. In this case, that’s Bitcoin. However, an ETF can also represent a group of assets.
Now, a Bitcoin spot ETF is physically backed by Bitcoin. So, it matches the value of the ETF. There are already various Bitcoin ETFs available. However, there’s hasn’t been an approved Bitcoin spot ETF yet. That’s because of the nascent nature of Bitcoin. In general, you can consider a Bitcoin spot ETF as the more legitimate option. That’s because you actually buy Bitcoin.
Bitcoin ETFs and Bitcoin spot ETFs can attract millions of institutional dollars. Buying into an ETF means that you don’t need to worry about getting a wallet. The same goes for the associated private keys. In contrast, you own shares in the ETF. Pretty much the same way as you would own shares in the stock market. Institutions will now have exposure to Bitcoin. What may be attractive to them, is that it’s without having to deal with a crypto exchange or wallet.
Another important feature is that ETFs are regulated. Besides the convenience it may bring. This way, it both regulates the investment entity which is the ETF and the custodian. Currently, with self-custody, that legal aspect would be missing. The following picture shows another aspect of ETFs. All the top 15 best-performing equity ETFs this year are Bitcoin and crypto-related.
Source: Twitter
What is a Bitcoin ETP?
So, Gabor Gurbacs claims that there are no Bitcoin spot ETFs possible in Europe. He explains this in a Twitter thread. However, there are spot ETPs (exchange traded products). These are 100% backed by the physical underlying asset.
He claims that his company or team launched one of those physical Bitcoin ETPs. Furthermore, he claims that the new Bitcoin spot ETF is not an ETF. London-based Jacobi Asset Management listed this so-called Bitcoin spot ETF in Amsterdam.
Gurbacs points out that Jacobi registered the product (the ETF) in Guernsey. He says that this is not distributable into Europe. You would need to register it first. Before you can call something an ETF in Europe, you need to diversify it.
To sum up, according to Gurbacs, the Jacobi listing of their ‘BCOIN’ is not an ETF. It’s stuck in the middle as to what it is. What it looks like is an ETP. That is the most likely option if it’s Bitcoin only. On the other hand, Jacobi did announce their product to be a Bitcoin spot ETF.
No such thing as a "spot Bitcoin ETF" in Europe. Anything that's called an ETF must be diversified.
As far as ETPs go, Europe has spot ETPs (physically backed) for a long time. My team launched one of those physical Bitcoin ETPs.
— Gabor Gurbacs (@gaborgurbacs) August 15, 2023
Why Did Europe Approve an ETF and the US Hasn’t?
There are many possible reasons why Europe approved an ETF and the US hasn’t. It’s most likely a political game on the highest levels. Whatever we discuss here, is our opinion, and it’s just that, an opinion. However, big banks and institutions help fund election campaigns. Until they say they want an ETF, it’s unlikely that this is going to happen.
The SEC shot down all previous Bitcoin spot ETFs applications. That wasn’t too difficult, with all applications coming from crypto firms. However, BlackRock and Fidelity are among the new applicants. They rank high among established financial institutions. Now bankers in high and powerful positions want spot ETFs. That’s a serious game-changer.
As a result, it will be a lot tougher for the SEC to deny these applications. Especially looking at who applied and what they stand for. Furthermore, BlackRock has a remarkable track record for ETF applications with the SEC. Currently, this record stands at 575-1.
Gut feeling: SEC wants Binance gone before #Bitcoin ETF approval.
— Stack Hodler (@stackhodler) August 15, 2023
Conclusion
Europe announced its first approval of a Bitcoin spot ETF. We explained what a Bitcoin ETF and a Bitcoin spot ETF are. There also seems to be some misunderstanding about what forms a spot ETF in Europe. As a result, we may be looking at an ETP instead of an ETF. Last but not least, we looked at why Europe is a step ahead of the US in this field.
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