Ethereum
As Ethereum ETFs set to shake up the US market, Europe is wondering “what took you so long?” » – DL News
- Europe has many exchange-traded crypto products on the market.
- The UK launched an Ethereum ETP this week.
- European investors are not very interested in crypto ETPs.
In the United States, the crypto industry is abuzz in anticipation of the expected approval of Ethereum spot exchange-traded funds.
But countries across the Atlantic already have a head start with similar crypto investment products.
The London Stock Exchange, for example, will begin processing Bitcoin and Ethereum exchange-traded products for the first time by the end of May.
Many FTEs
And in Europe, there are already several Ethereum financial products, or ETPs, on the market. They include exchange-traded notes and exchange-traded commodities, which work similarly to ETFs.
But these products, which have been on the market for years, haven’t really caught on. That’s because Europeans are less inclined to risky investments and prefer stability, experts say.
“If we’re talking about where the alpha is going to come from, it’s going to be where the capital markets are deeper and the investor base is more enthusiastic and it’s going to drive capital flows to push these things higher,” Erwin Voloder, head of policy at the European Union. Blockchain Association, said DL News.
Digital asset investment firm 21Shares launched its Ethereum Staking ETP in 2019, and Ethereum ETPs from VanEck and CoinShares debuted in 2021.
But incoming flows are relatively low.
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21Shares’ Ethereum ETP has over $307 million in assets under management, and VanEck’s has total net assets of $175 million.
Meanwhile, in the United States, institutional investors are already ready to invest $500 million in Ethereum ETFs over the next week if they are approved, according to a report. analysis by the OKX stock exchange.
Enthusiasm in the United States
The products track the price of Ether and allow investors to access crypto through a bank or investment company without having to open a crypto wallet or account on a crypto platform.
For supporters, crypto ETFs and ETPs provide digital assets with validation and a bridge to broader financial markets.
The United States Securities and Exchange Commission approved 11 Bitcoin spot ETFs in January. The two largest funds, launched by BlackRock and Fidelity Investments, between them sucked in more than $30 billion on Thursday.
But there are stark differences between Europe and the United States.
Europe has “a more ecosystem approach” to innovative finance, according to Voloder.
With legal frameworks for crypto assets coming into force this year and other investment guidelines from regulators, the legislation lays the groundwork.
“Even though Europe has regulations, our investor base has historically lagged behind America.”
-Erwin Voloder
“European regulators are more proactive and American regulators are more reactive, which is why we see brokers launching digital asset structured products in Europe,” Voloder said.
“Regulations allow for innovation and experimentation,” he added. This is what allows financial institutions to test tokenized financial instruments.
But the size of capital markets is nevertheless reflected in this underlying divergence.
“Even though Europe has the necessary regulations to enable innovation, our investor base has historically lagged behind America,” Voloder said.
Crypto ETPs beyond Ethereum
Liqwid’s Cardano Staking ETP began trading on Wednesday on the Deutsche Börse exchange group. The product is domiciled in Switzerland.
“Switzerland is at the forefront, because staking is regulated there, which allows us to create products integrating staking, which is not yet possible in the United States,” said Florian Volery, co -founder of Liqwid Finance. DL News in an email. He hopes the United States will eventually catch up.
The DeFi entrepreneur expects to see actively managed ETFs including other crypto assets like Bitcoin or Solana in an investment strategy.
“This development is a game changer for the crypto industry, making it mainstream and a dedicated investment category within the asset and wealth management sector,” Volery said.
Inbar Preiss corresponds to the regulations at DL News. Contact her at inbar@dlnews.com.