On June 18, the London-based ETC Group listed the first cryptocurrency exchange-traded product on the German digital stock exchange Xetra. Traders in Italy, the United Kingdom, and Austria can now deal with shares of this new product.
ETC Group said on June 9 that “BTCetc Bitcoin Exchange Traded Crypto”, or BTCE, would launch on Deutsche Börse Xetra, according to ETF Stream. Trading has started after Xetra got approval from the German financial regulators BaFin. Also, it is backed by London-based brokers.
Deutsche Börse Xetra is the reference market for exchange trading. It deals with German shares and exchange-traded funds (ETFs). Over 90% of all trading in shares at all German exchanges and 30% of trading in ETFs in Europe is transacted via Xetra. The trading venue is fully operated by Frankfurter Wertpapierbörse based in Frankfurt, Germany.
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BTCE tracks Bitcoin price and is physically backed by the digital asset. The bitcoin involved in this new market will be managed in cold storage by BitGo, a digital asset custodian.
Earlier, Bradley Duke, ETC Group CEO, explained:
“The crypto sector has been held back by concerns about complexity, accessibility, and governance. With BTCE, we are transporting Bitcoin into the fold of mainstream, regulated financial markets. Investors get the benefits of trading and owning Bitcoin through regulated security while having the optionality of redeeming Bitcoin if they choose.”
The group was quick to confirm that it is offering Bitcoin trading using an exchange-traded product (ETP) structure. That strategy is not similar to having an exchange-traded fund.
What it means for bitcoin
Xetra said that the ETP lets investors invest in bitcoin in the same way that they would invest in various traditional financial assets. The exchange also states that this product is the “first centrally cleared Bitcoin exchange-traded product to list on Deutsche Börse.” It will trade in Xetra’s primary order books and get distributed on HANetf.
However, the ETP is not bitcoin in itself but instead an asset-backed by BTC and it matches bitcoin price.
Nevertheless, Xetra’s ETP enables traditional investors to have an easy way of investing in the virtual currency. It eliminates interaction with unregulated exchanges, cryptographic keys, and wallet software.
Investors can, therefore, redeem the ETP for bitcoins or cash. With such platforms coming up, more investors can get an opportunity to invest in the Bitcoin market. That might drive mass adoption which will increase liquidity in the market.
As demand increases, the price of bitcoin might also surge and institutional investors will come in to push bitcoin to greater price levels.