Will be listed on Switzerland’s main stock exchange
The product, called CoinShares Physical Bitcoin (BITC), will be listed on Switzerland’s main exchange SIX today. Each BITC unit will be backed by 0.001 bitcoin.
ETPs can be bought and sold like stocks. Passive investments that aim to reflect the performance of an underlying asset. Since CoinShares’ BITC product is physically supported, it will directly have the underlying asset to secure liabilities.
The company’s current bitcoin products are synthetically structured. Townsend Lansing, product head of CoinShares, said in a statement, “This means they are not physically 100% supported. They hold at least 75% of the orientation to physical bitcoin, and the remaining 25% can be used to generate bitcoin futures or cash for liquidity purposes. On the other hand, BITC declares that “it will always be 100% physical”.
Credit risk is minimized
According to Lansing, a physically backed ETP minimizes credit risk. With a synthetic ETP, “there is always some credit risk element because you effectively have financial obligations.”
BITC will have a lower expense rate of 0.98% compared to CoinShares’ current bitcoin ETPs, which charge 2%. Lansing said that the prices for existing products will no longer be reduced due to legal restrictions.
Europe-based CoinShares currently manages approximately $ 3.5 billion in assets. Its US-based competitor Grayscale has more than $ 27 billion in assets. When asked why Bitcoin investment products are less popular in Europe, Lansing points out that the US is a much larger market.
However, crypto ETP providers in Europe are growing. Just last week, Germany-based ETC Group also listed a physically supported bitcoin ETP on SIX. The exchange currently provides a total of 35 crypto ETP products.