Invesco Launches Europe’s First Physical Bitcoin ETN Amid U.S. ETF Withdrawal

Invesco’s Bold Step into European Crypto Market

Invesco, the asset management powerhouse, is shaking things up across the Atlantic by launching a spot Bitcoin exchange-traded note (ETN) in Europe. Just as the dust settled from their withdrawal of a Bitcoin futures ETF filing in the U.S., they’re busy unveiling the Invesco Physical Bitcoin ETN, bound for the digital stage of Deutsche Boerse’s Xetra.

The Technical Breakdown: What’s in an ETN?

Trading under the ticker symbol BTIC, this new financial product is physically backed by Bitcoin, meaning actual bitcoins are held securely to support the ETN. Central clearing via Eurex Clearing helps mitigate transaction risks, making it more palatable for cautious investors.

Safe Custody, Happy Investors

The Bitcoin backing BTIC won’t just be tossed into a vault; it’s getting the royal treatment from Standard Chartered through their crypto custody platform, Zodia. According to the reports, Northern Trust, a co-investor in Zodia, will act as BTIC’s administrator. It’s like having a custodian who not only watches your piggy bank but also ensures it’s filled with golden coins—or in this case, Bitcoin!

CoinShares and the Index That Guides Us

CoinShares, a big name in the European digital asset management scene, is stepping up as both the index sponsor and execution agent for the BTIC ETN. By tracking the CoinShares Bitcoin Hourly Reference Rate index, investors are set to experience the price performance of Bitcoin, albeit with a smidge of fees deducted—because, let’s face it, who doesn’t love a little deduction?

Invesco’s Change of Heart on ETFs

Gary Buxton, the head honcho for ETFs and indexed strategies at Invesco, expressed that their retreat from the Bitcoin futures ETF came from a desire to provide stronger, more transparent investment options. The synthetic liquidity of futures was a bit of a red flag for them, hence the switch to the more observable market of physical Bitcoin. Who knew finance could sound so much like a soap opera?

The Growing Crypto Scene in Europe

This launch comes at a time when European exchanges, particularly Deutsche Boerse, are widening their net on crypto derivatives products. With 26 ETNs offered across various cryptocurrencies, including Bitcoin and its pals like Ether and Litecoin, it’s clear this market is no passing fad. It’s like every day is a new party in the crypto world, and everyone’s invited!

ETFs vs. ETNs: What’s the Difference?

While both ETFs and ETNs are types of exchange-traded products (ETPs) that fairly mirror their underlying assets, there’s a distinct difference: ETFs are more like mutual funds, while ETNs resemble unsecured debt notes. ETNs don’t hold any physical assets, but instead, they promise to deliver returns sourced from the performance of a specified asset or index. It’s finance’s way of adding a twist to the narrative!