ETF issuers cannot afford to avoid cryptocurrency market any longer

Invesco is the most recent issuer to enter the crypto ETP area

Executives on the main ETF issuers might be paying shut consideration to the most recent launch to hit the European ETF market. After months of rumours, Invesco lastly made its long-awaited entrance into the cryptocurrency exchange-traded product (ETP) area with the launch of the Invesco Bodily Bitcoin ETP (BTIC).

Invesco is the second issuer with over $25bn ETF belongings beneath administration (AUM) in Europe after WisdomTree to make the large bounce into the crypto area.

The similarities with the gold exchange-traded commodity (ETC) area are clear to see. WisdomTree – via its acquisition of ETF Securities in 2018 – runs the world’s first gold ETC which launched in 2003 whereas Invesco presently manages Europe’s largest ETC, the Invesco Physical Gold ETC (SGLD), which homes $14.2bn AUM.

In the meantime, comparisons between the underlying assets – bitcoin and gold – have been fixed amid the previous’s meteoric rise over the previous few years.

As a analysis word from Robeco mentioned: “Identical to gold, bitcoin is scarce and sturdy. As well as, bitcoin reveals excessive portability, is well transactable and programmable. What it lacks relative to gold, after all, is a protracted historical past of being perceived as a retailer of worth.

“As digital gold, bitcoin has financial worth. In our view, the dialogue about bitcoin’s lack of intrinsic worth is generally irrelevant. As with diamonds, artwork, stamps, gold and the US greenback, bitcoin doesn’t present money flows. But, all these asset courses have financial worth, and most of them are thought of to be a retailer of worth.

Bitcoin ETPs have already began to make their mark within the European ETF market. The primary bitcoin ETP, the 21Shares Bitcoin ETP (ABTC), was solely launched in February 2019, nonetheless, Europe’s largest crypto ETP, the BTCetc Change Traded Cryptocurrency (BTCE), has already soared previous the $1bn AUM barrier and now totals $1.4bn.

As regulatory headwinds – such because the UK’s ban on selling crypto ETNs to retail traders – reduce, belongings are solely set to extend.

This progress is what has caught the attention of Invesco’s head of EMEA ETFs Gary Buxton who revealed to ETF Stream the agency has been engaged on a crypto ETP since 2018.

Like Robeco, Buxton sees many similarities with the dear steel: “Within the final two to a few years, we have now been attempting to construction a product that regarded, from an institutional perspective, as shut as attainable to a conventional ETF like our gold construction, and that has been the motive force of BTIC’s timeline.

“Bitcoin could be very near gold within the sense that traders view it as a diversifier from their conventional investments, another asset with outlined and restricted provide.”

Consideration now turns to the opposite main gamers in Europe. State Avenue World Advisors (SSGA) has been maintaining a close eye on the market over the previous 12 months, nonetheless, no phrase is but to return from the standard European asset managers corresponding to Amundi, DWS and UBS Asset Management.

Because of this, these gamers – and others – threat shedding out to the likes of Invesco if the crypto market continues its fast enlargement as many imagine it’s going to.