Europe is set to welcome its first spot Bitcoin (BTC) Exchange Traded Fund (ETF) after a twelve-month delay.
The Jacob Asset Management Group initially secured the approval for the ETF from the Guernsey Financial Services Commission (GFSC) in Oct 2021 but faced setbacks with the firm citing unprecedented market conditions.
According to the London-based firm, the spot ETF was scheduled for a debut on the Euronext Amsterdam Exchange in July 2022.
The firm has pointed fingers at the crash of the Terra network in April last year which reportedly wiped off billions from the industry’s market cap and the implosion of FTX in November.
Jacobi told the Financial Times that it is now ready to roll out the ETF this month after the market “demand has shifted since last summer”.
For a larger part of 2022, the crypto market had a bearish outlook with several assets shedding up to 50% of its value. Notably, BTC, the underlying asset of the spot ETF lost over 55% of its value but has regained 80% in the past six months.
A major takeaway from Jacobi’s spot BTC ETF is that it marks a significant shift from all previous crypto products backed by institutional investors in Europe as they were structured as Exchange-Traded notes (ETN).
The difference between both products is that while an ETF holder owns a portion of the fund, investors in ETNs own debt security.
Peter Lane, the firm’s Chief Operating Officer explained that there is a misuse in terms noting that ETFs cannot be leveraged, unlike ETNs which are exposed to counterparty risks.
“There has been so much misinformation and misuse of the term ETF by [ETN] issuers, presumably to obfuscate the risks that are inherent in acquiring and investing in ETNs.”
US investors maintain hold
With new developments coming out of Europe, many crypto enthusiasts have continued to ask when the Securities and Exchange Commission (SEC) will approve the first spot BTC ETF in the United States.
The financial regulator has previously turned down all applications for a spot ETF citing market manipulation concerns among others.
This year, multiple institutional giants including BlackRock, Valkyrie, WisdomTree, and Fidelity have filed applications to the SEC for a spot BTC ETF with many observers suggesting that all obstacles have been removed.
It is still unclear if a Gensler-led SEC would approve the first spot BTC ETF for the US but should it happen, analysts opine that it could lead to an uptick in institutional adoption of Bitcoin.
Following BlackRock’s application, the price of BTC spiked to new levels not recorded in months and regained its 50% market share dominance after two years.