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ETC Group to launch centrally cleared Bitcoin ETP with HANetf

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ETC Group is to list the world’s first centrally cleared Bitcoin Exchange Traded Cryptocurrency, BTCetc Bitcoin Exchange Traded Crypto – (BTCE), on Deutsche Börse’s XETRA platform later this month. 

ETC Group is to list the world’s first centrally cleared Bitcoin Exchange Traded Cryptocurrency, BTCetc Bitcoin Exchange Traded Crypto – (BTCE), on Deutsche Börse’s XETRA platform later this month. 

The ETC tracks the price of Bitcoin and is 100 per cent physically backed, designed to provide investors with a safe and transparent way to gain exposure to Bitcoin. 

This is the first cryptocurrency product to launch on XETRA, the inaugural ETP from ETC Group and the first cryptocurrency ETC to be available through HANetf’s white label ETP platform. 

The firm says that this structure gives investors several benefits over investing directly in Bitcoin. Traded on regulated markets, investors can buy and sell the ETC in the same way they would when trading conventional shares or ETPs, with the identical regulatory protections in place. 

“CCP clearing is a feature that investors expect when trading on a regulated exchange and BTCE brings this standard to Bitcoin and cryptocurrency trading for the first time. Clearing through a CCP greatly reduces the counterparty risk when trading BTCE.” 

Approved by BaFin, the German financial regulator, BTCE is structured as an ETC that is physically backed by Bitcoin. The firm writes that each unit of BTCE gives the holder a claim on a predefined amount of Bitcoin – a structure very similar to physically-backed gold exchange traded commodities, and allows investors the option for redemption in Bitcoin.  

“For every unit of BTCE, there is Bitcoin stored in regulated, institutional-grade safe custody. The entire ETC structure is based on a transparent and verifiable process to ensure that the provenance of all Bitcoin in custody has been strictly vetted,” the firm writes.

“Investors don’t need to engage with the technical challenges of purchasing and storing Bitcoin such as setting up a cryptocurrency wallet or trading on unregulated crypto exchanges and there is no need to manage cryptographic keys or engage with blockchain technology. Units of BTCE are safely held with an investor’s securities broker or bank, thus removing the risk of losing the investment because of, for instance, lack of knowledge of how cryptographic keys work.”

ETC Group writes that BTCE is traded on one of Europe’s largest exchanges and is supported by a network of world class Authorised Participants (APs) and Market Makers, experienced in cryptocurrency markets as well as the ETP markets, with the APs managing on-exchange liquidity and tight spreads, enabling traders to purchase in all sizes without having to worry about market impact. 

“Trading will be centralised on XETRA, drawing liquidity from the many fragmented crypto exchanges. ETPs are at their most powerful when they democratise access to difficult-to-access asset classes. The Bitcoin ETP that can harness global liquidity in a robust and tried and tested product structure.”

On 2 March, 2020, BaFin, the German Regulator confirmed that they now officially recognise cryptocurrencies as financial instruments.

Bradley Duke, CEO of ETC Group, says: “BTCE brings the transparency and investor protection that regulators and institutional investors require to the world of Bitcoin. 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 a regulated security. while having the optionality of redeeming Bitcoin if they choose.  Alongside the issuing of the exchange traded cryptocurrency, we are also very pleased to partner with HANetf to help us to democratise crypto investing through greater content and education.”  

Hector McNeil, co-Founder and co-CEO at HANetf, says: “We are very excited to work with Bradley and his team at ETC Group. Yet again HANetf is acting as a force for innovation, demonstrating the power of our white label ETF model to break down the barriers to entry to this market. Investors truly want value added products and HANetf’s unique multi manager platform delivers this – as the launch of BTCE proves.”

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