VanEck Europe Launches ETF-Like Bitcoin Product

As Bitcoin attracts more and more institutions, financial products that make it accessible to the traditional market emerge. The latest addition is an exchange-traded note (ETN) from VanEck Europe.

1) Today @vaneck_eu launched a #Bitcoin #ETN. The ETN is physically-backed by Bitcoin and listed on Deutsche Böerse Xetra. Launching a Bitcoin ETP was a top priority for VanEck. We succeeded! VanEck hopes to serve many in Europe and Asia! Resource page: https://t.co/oRpVOQyby2 pic.twitter.com/xnCnTWqMrG

— Gabor Gurbacs (@gaborgurbacs) November 25, 2020

ETNs are similar to exchange-traded funds (ETFs), but there is a key difference. An ETF is a proxy for a company that buys or sells the underlying asset, while ETN is a proxy for an asset’s performance. 

Hence, an ETN provider doesn’t need to hold the underlying asset.

Still, VanEck’s latest bitcoin ETN is backed 1:1 with the underlying, which means that the more notes are sold, the more BTC the provider needs. As a result, traditional market participants can access Bitcoin’s price action without holding it, and their demand will still be funneled to the crypto market.

The new ETN has a total of $2 million in assets. Retail investors from Germany, Liechtenstein, Netherlands, and the United Kingdom, along with their peers from Asia, will be able to invest in this product.

Bitcoin exchange-traded products (ETPs) outside of the U.S. have existed before the ETN from VanEck. A similar product was offered by XBT Provider as early as 2015. 21Shares also offers ETPs for Bitcoin, Ethereum, and a basket of cryptocurrencies.

VanEck is taking advantage of the global interest returning to crypto. As a research associate at the digital asset manager, 21Shares, Eliézer Ndinga, told Crypto Briefing: 

“This market has been driven by a rise in institutional adoption to the extent that legendary hedge fund manager Ray Dalio, historically a Bitcoin skeptic, has begun to wonder whether he’s missing something about Bitcoin. As a result, more issuers are entering the industry to offer institutional-grade products to financial institutions.”

Launching an ETN in Europe may help VanEck with its efforts to make a Bitcoin ETF in the U.S. a reality. Previously, VanEck made an ETF proposal to the SEC but withdrew it in September 2019 after multiple decision delays.