Fidelity has launched an exchange traded product for bitcoin in Europe. The ETP is among the cheapest and targets customers seeking exposure to digital currencies based on the distributed ledger technology.
Fidelity International has just launched its first Bitcoin exchange traded product (ETP) in Europe. This is in the company’s bid to expose its clients and investors to digital assets such as bitcoin after a survey conducted by the institution showed that 70% of respondents were willing to invest or gain exposure to digital currencies.
The Bitcoin ETP (FBTC)which was listed on the Deutsche Boerse and Frankfurt Stock Exchange has a total exchange ratio (TER) of 0.75%, thereby holding a joint-cheapest ETP record with the Bitcoin Tracker Certificate USD (SBTCU) owned by SEBA bank.
Bitcoin Exposure for Clients
The managing director of Fidelity International for Europe, Christian Staub said that the move to launch the bitcoin ETP stemmed from the desire of the company’s clients to gain exposure to digital currencies in a safe way bearing in mind that the technology is bound to have profound impact on the financial system.
According to Staub,
“As this technology becomes increasingly accepted, our clients are rightly asking for an efficient way to benefit from this trend. FBTC offers clients an institutional quality solution to enter the market in a familiar, simple and secure way.”
The Fidelity ETP will be administered by Brown Brothers Harriman.
An exchange traded product (ETP) takes advantage of the value of the underlying asset or security and its value is derived from that of the asset. ETF’s are actually ETP’s according to Garbor Gurbacs, a director at VanEck, whose company also has an active ETP.
According to Gurbacs,
“ETP is the umbrella category for exchange traded funds (ETFs), exchange traded notes (ETNs), exchange traded commodities (ETCs). In Europe ETNs are traditionally certificates (not physically backed). VanEck’s ETP is a physically backed structure and hence prefers ETP as a nomenclature. You can call it a physically backed ETN,”
There are pending ETF applications such as from Grayscale for which the Securities and Exchange Commission (SEC) has called for public inputs, although it is yet to be approved despite positive feedback.
Many investors have been wondering why financial institutions such as Fidelity International launch bitcoin-backed ETPs for their clients instead of the investors buying bitcoins for themselves. The reason is the exposure and convenience it offers high-end investors.
An ETP eliminates the need for the technical issues such as security of the assets. Investing billions directly into BTC and having to worry about the security of the private keys is a reason for concern. This is why products like ETFs work well for institutional investors and the super rich.
Unlike the SEC which has been overly cautious in the approval of ETFs, Europe already has dozens of ETNs that give investors exposure to digital assets such as bitcoin and ethereum.
Speedy Gonzales, an EU resident, reacting to the announcement of the Fidelity ETP wrote on Twitter:
“There have been dozens of ETNs in Europe for a long time for bitcoin, ethereum and other altcoins. People have been able to buy them via banks or brokerages that offer international trading…”