Bitcoin Spot ETF: how can I access it in Europe?
Since 11 January, American investors have been able to gain exposure to bitcoin through simple securities accounts with their banks and investment applications. But what about Europeans?
The big news has finally come down! After several months of suspense, the first Bitcoin Spot ETFs - 11 in total - have been approved in the US.
Since last Thursday, US investors have been able to gain exposure to bitcoin through simple securities accounts with their banks and investment apps. But what about Europeans?
Many of you have asked us whether you could buy ETFs from BlackRock, Fidelity or Hashdex. And, at the risk of disappointing you, unfortunately you don't have access to them, at least not yet 🙃.
For that to be the case, these ETFs would have to be registered and adapted to European regulations.
But, as we explained a few weeks ago, Europe already has Spot ETF equivalents, on bitcoin and other cryptocurrencies, except the name just isn't the same. We explain it all to you here.
👉 First, what is a Spot ETF?
ETFs are funds (Exchange Traded Funds = ETFs) whose share value undertakes to reflect as closely as possible the price of an asset or a basket of assets (several at a time).
The reason there has been so much media coverage of ETFs in the United States is that, until now, there have only been crypto 'futures' ETFs, i.e. based on futures contracts that allow you to bet downwards or upwards on a security and a given period of time.
The problem is that these are more complex products to understand and, above all, behind them there are no 'real' cryptos held in reserve. The purpose of futures contracts is to hedge against market fluctuations.
By contrast, if you buy the share of a US Bitcoin Spot ETF (BTC), it will reflect as closely as possible the performance of bitcoin, which will be the only asset held in reserve.
👉 Where can you find ETFs in Europe?
In Europe, ETFs are part of the ETP (Exchange Traded Product) family. Unlike in the United States, it is not possible to offer an ETF that replicates the performance of a single asset for investor protection reasons.
To do this, it is necessary to go through a structure called ETCs (Exchange Traded Commodities), which are in some ways the European equivalent of American Spot ETFs.
"The main difference lies in the legal nature of the funds. In an ETF, you hold joint ownership of the underlying asset with the other holders, whereas an ETC is a debt security where the issuer undertakes to reproduce the performance of the underlying asset it holds on its side. But these instruments are very similar in that neither allows the underlying asset to be recovered, only exchanged for cash," explains Jérôme Castille, head of compliance at CoinShares, one of Europe's largest crypto asset managers.
One final minor quibble: if hardly anyone has heard of the existence of these European-style Spot ETFs, it's largely because they are almost never distributed by French brokers or banks, "mainly for reputational reasons", confides a former French banker.
Thus, these products are not accessible via Crédit Agricole, BNP Paribas or even "neo-banks" such as Boursorama or Revolut. You have to go through brokers like De Giro, Saxo Bank or Scalable Capital.
There are indeed European players who claim to offer Bitcoin ETFs; this is the case with Jacobi Asset Management (read our interview) and Melanion Capital. But in reality, these two players are based on a basket of assets that are supposed to replicate bitcoin's performance as closely as possible, essentially made up of shares in companies specialising in crypto.
When you buy a share in one, you are not directly exposed to bitcoin's performance as with a Spot ETF or a European ETC. It should also be noted that Jacobi's is only available to professional investors.
👉 Who are the main European players?
The largest issuer is ETC Group with its "ETC Group Physical Bitcoin" which totals $1.2 billion in assets under management for management fees (TER = total expense ratio) of 2%.
The oldest asset manager specialising in crypto, CoinShares, offers its "CoinShares Physical Bitcoin", which has so far managed to attract $660 million with management fees among the lowest on the market at 0.98%.
By way of comparison, Bitcoin Spot ETFs from BlackRock or other US giants have fees of less than 0.5% (so US competition looks set to be fierce 🥵)...
For its part, Switzerland's 21Shares offers two types of bitcoin ETC in particular. The first is the "21Shares Bitcoin ETP" with $585 million under management. Fees are 1.49%.
The second, the "21Shares Bitcoin Core ETP", has $60 million under management and offers more attractive fees of 0.21%. You could be tempted, but beware: such low fees are possible because the asset manager will lend some of the BTC in the ETC's reserve to other market players, generating an additional risk of losing the asset.
WisdomTree, one of Europe's largest asset managers, not just specialising in crypto, also offers for trading its "WisdomTree Physical Bitcoin" with a TER of 0.95% and total assets under management of just over $330 million.
Also worth noting, there are many ETCs on other cryptocurrencies such as Ethereum, Solana or even BNB, the native cryptocurrency of the Binance platform.