After a Year-Long Delay, Europe’s Inaugural Spot Bitcoin ETF Sets Sights on Launching in 2023

After a one-year delay, Europe’s inaugural bitcoin exchange traded fund (ETF) is expected to be publicly listed this month, according to Jacobi Asset Management.

Originally scheduled to list on Euronext Amsterdam in July 2022, the fund’s launch was postponed due to concerns following the Terra Luna cryptocurrency crash in May 2022 and the collapse of cryptocurrency exchange FTX in November. However, Jacobi Asset Management now confirms that the ETF is “on track” for its launch, noting that the demand for such products has evolved since last summer.

It is worth noting that in Europe, digital assets exchange traded products have primarily been structured as exchange traded notes (ETNs) rather than funds. ETF shareholders own a stake in the underlying shares of a fund, while ETN investors possess a debt security rather than direct ownership of the underlying assets.

Jacobi emphasises the distinction by highlighting that it is launching an ETF, not an exchange traded note. Peter Lane, co-founder and chief operating officer of Jacobi, expressed his criticism of structured note issuers, accusing them of “misuse” of the ETF label in a previous statement to Ignites Europe.

The Jacobi Bitcoin ETF represents a significant departure from the customary practice of using exchange-traded notes (ETNs) for crypto-backed financial instruments. It adopts a centrally cleared structure with custody support provided by Fidelity Digital Assets.

In Europe, all conventional financial instruments backed by cryptocurrencies have thus far been structured as ETNs, rather than funds.

The key distinction between an ETN and an ETF lies in ownership. ETF shareholders possess a stake in the underlying assets of the fund, while ETN investors hold debt securities. ETFs, in contrast to ETNs, do not allow for leverage or the use of derivatives, thereby mitigating potential risks associated with market manipulation.

“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,” Peter Lane, Co-Founder and CEO of Jacobi, told Ignites Europe last year. 

Despite Europe’s successful approval of its first spot Bitcoin ETF in October 2021, the United States Securities and Exchange Commission (SEC) has consistently rejected all spot Bitcoin ETFs thus far.

However, in 2023, several prominent institutional players, including BlackRock and Fidelity, have submitted new applications for spot Bitcoin ETFs, aiming to secure the distinction of being the first U.S.-approved ETF of this kind. It is noteworthy that the SEC had granted approval for a couple of futures Bitcoin ETFs in 2021.

You can read about Blackrock’s application here.

You can read about Fidelity’s application here.

Exciting times continue on the institutional adoption front for Bitcoin.