Crypto Exchange-Traded Products Are Blossoming in Europe

The crypto exchange-traded products (ETP) market in Europe is becoming more competitive compared with North American and Latin America, and issuers are launching more of the investment vehicles because of increasing demand, says a top industry analyst.

On Monday the Swiss asset manager Valour Inc. listed two new ETPs on the Nordic Growth Market, which operates in Sweden, Finland, Denmark and Norway. The firm has listed Valour Terra and the Valour Avalanche ETPs.

ETPs are proving to be a very popular way for European institutional investors to gain access to crypto. Banks including Goldman Sachs, ICAP, JPMorgan and UBS have all bought ETPs for an increasing number of clients. With interest growing, so are the types of ETPs being listed.

Last month, asset manager Fidelity International listed the Fidelity Physical Bitcoin ETP on the Deutsche Börse in Frankfurt and SIX Swiss Exchange in Zurich. That product is available to investment firms and institutional clients in Europe.

There are now 73 crypto ETPs in Europe, with $7 billion in assets or 57% of the global crypto ETP industry, as of Feb. 25, Deborah Fuhr, managing partner and founder of ETFGI, which tracks the ETF industry, told CoinDesk.

So far, Canada has 17 crypto exchange-traded funds (ETF) or ETPs available, the U.S. has three ETFs and Latin America has seven products available to investors, reports ETFGI.

Why is Europe at the forefront on listing crypto ETPs?

“We are seeing an increase in the number of issuers launching crypto ETPs in Europe as more investors are doing due diligence on investing in crypto and some are starting to add some bitcoin and other crypto exposures to their portfolios,” said Fuhr.

According to ETFGI, assets of $12.4 billion were invested in 100 crypto ETFs or ETPs listed globally at the end of January.

XBT Provider is the largest ETP provider in terms of assets with $3.1 billion, or a 25% market share, according to Fuhr. 21Shares is second with $1.7 billion and a 14% share.

In 2020, the crypto ETP market exploded, more than quadrupling to a then-record $3.1 billion, says Laurent Kssis, a crypto ETF expert and director of CEC Capital, citing data from Trackinsight.

Much of the interest has been driven by the success of bitcoin (BTC), fueled by a continued public embrace of cryptocurrencies by large institutions such as Ruffer, the U.K. investment manager, according to Kssis.

“However, it's pretty clear institutional interest hasn't done for bitcoin what it was supposed to do, and that is to establish the cryptocurrency as a digital safe haven better than gold,” Kssis said.

Read more: Fidelity International Debuts Bitcoin ETP in Europe