More and more institutional investors are taking the plunge into the crypto market. Eurex is now launching a Bitcoin ETN.
European Exchange (Eurex), one of the leading and world’s largest providers of financial derivatives, announced on September 13th on Twitter that the futures exchange will now offer Bitcoin ETN (Exchange Traded Notes) for its customers to trade. The news is likely to play into the hands of institutional investors in particular. Because they usually do not buy Bitcoin directly, but stick to financial derivatives, which are based on BTC as an underlying. Eurex AG has been wholly owned by Deutsche Börse Group since 2012.
Bradley Duke, CEO of ETC Group, has the following comments on the new product:
Bitcoin futures listing today … is another major milestone in providing financial products to institutions that allow exposure to cryptocurrencies on regulated exchanges.
An information sheet on the company’s website further states:
With Bitcoin ETN futures traded in euros, Eurex enables participants to trade on BTC performance in a simple and fully regulated manner.
These futures offer direct exposure to the price of BTC … while staying within a familiar and regulated financial infrastructure.
Difference between ETF and ETN
ETFs are certainly more familiar to people than ETNs. Basically, both belong to the Exchange Traded Products (ETPs). The aim of an ETP is to map an index or an underlying asset (e.g. Bitcoin) without being directly invested in it.
Boerse Stuttgart writes about ETFs: “They represent an index, an industry or a topic. They offer diversified access to the industry. ” For example, ETF holders can invest in all DAX stocks. “ETFs represent a special fund and are therefore also protected from the insolvency of the corporation.”
ETNs, on the other hand, offer the opportunity to speculate or invest in currencies. ETNs are bonds that do not offer any protection against the insolvency of the issuer.
Main advantages of the Bitcoin ETN
The company sees the following key elements and advantages of the Bitcoin ETN:
- Exposure to the BTC price
- Trustworthy and familiar infrastructure
- Trading on EU-regulated markets (EUREX / XETRA)
- Centrally processed
- Options to exchange for BTC via ETN
Even if most crypto investors will certainly not invest in the cryptocurrency market via a Bitcoin ETN, the new Eurex product also offers more conservative and institutional investors the opportunity to participate in the Bitcoin trend. Which ultimately can benefit all crypto investors.