The Crypto Wave: Iconic’s Bold Move

A budding German startup, Iconic, is making headlines with its ambitious attempt to introduce a Bitcoin exchange-traded note (ETN) to the Frankfurt and Luxembourg stock exchanges. Speculation suggests that this new financial product could hit the market as early as December 2019, allowing investors to dip their toes into the volatile waters of cryptocurrency investment—without needing to navigate the treacherous waters of direct crypto trading.

Understanding the ETN: A Lighter Lifeboat

Now, you might be scratching your head, wondering, “What in the crypto world is an ETN?” Think of ETNs as the charming little cousins of more well-known financial products like ETFs (exchange-traded funds). While ETFs are like a buffet where you can sample a variety of assets, ETNs, on the other hand, are more like a single dish served up by the issuer, in this case, Iconic. Backed by actual cryptocurrencies—specifically Bitcoin—these ETNs can provide investors with exposure to crypto assets without the hassle of direct ownership.

Coinbase: The Bitcoin Bankroll

Iconic plans to invest the funds raised from the ETN directly into Bitcoin, with the influential U.S.-based Coinbase acting as the gatekeeper for acquiring these digital coins. This partnership is strategic: not only does Coinbase enjoy significant trust, but it has also been expanding its footprint across Europe, making it a go-to source for Bitcoin in the region.

Regulatory Waters: Navigating Skepticism

Despite the promising prospects of the ETN, regulators are still keeping a cautious eye on crypto investments. Just last month, the U.S. Securities and Exchange Commission turned down an application for a Bitcoin ETF by the Bitwise Asset Management. In the U.K., the Financial Conduct Authority is considering a ban on cryptocurrency ETNs, putting a damper on the spirits of investors eager for new avenues in the crypto landscape.

A Step Towards Maturity in the Market

Experts are hopeful that the introduction of Bitcoin ETNs like Iconic’s will eventually pave the way for full-fledged crypto ETFs. Philip Sandner, head of the Blockchain Center of the Frankfurt School of Finance, has expressed optimism that Iconic’s success in gaining regulatory approval could indeed be a sign that a true Bitcoin ETF in Europe is on the horizon. So, although some investors may view ETNs with skepticism, they could very well be the heralds of a more matured market.