Bitcoin ETF and ETP: If Approved in the US, European Bitcoin Investment Products Will Be Outshined.
Stablecoin issuer Circle’s EU strategy director, Patrick Hansen, said today that if the US successfully passes a Bitcoin spot ETF, Bitcoin investment products in the EU will become uncompetitive.
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Comparing Bitcoin ETF and ETP
US ETF has lower fees!
ETF capital is more secure
US cryptocurrency products surpass Europe
Patrick Hansen believes that although Bitcoin ETFs are about to be approved in the US, EU investors will not be able to invest directly. Generally speaking, compared to the US, EU ETFs (UCITS) cannot be used for single assets such as Bitcoin or gold.
Instead, Exchange Traded Products (ETP, especially Exchange Traded Commodities ETC) and Exchange Traded Notes (ETN) have been available in Europe for many years, but the largest Bitcoin ETC fund has a total of only 1 billion Euros.
Patrick Hansen said that the fees for US ETFs are usually lower than those for EU UCITS funds, but the difference between the fees for future SEC-approved US Bitcoin ETFs and the current fees for European Bitcoin ETP/ETN will be even more astonishing.
The average TER (Total Expense Ratio) for the 10 largest existing ETP/ETN is 1.047%, while the average fees for the 10 upcoming Bitcoin ETFs (excluding GBTC) is less than half of that, at 0.451%.
Patrick Hansen said that EU UCITS funds are not only more than twice as expensive as US ETFs, but the structure of ETP and ETN is still that of debt securities. This means that investment capital cannot be individually protected in the event of issuer bankruptcy. Therefore, if the issuer or investment company becomes insolvent, investors in ETC/ETN may lose their funds. In contrast, capital invested in ETFs is protected.
Patrick Hansen said that although the US took a few years to catch up, if these Bitcoin ETFs are approved as expected, US investors will have a cheaper and safer choice of Bitcoin-based security products compared to EU investors. Therefore, due to the overall larger size of the US capital market, US Bitcoin ETFs will immediately outperform EU ETP/ETN counterparts in terms of scale.
ETF
ETP
EU
US
Further reading:
US Treasury Department seeks expanded enforcement tools and sanction authority, targeting “stablecoin issuers”
US loses £2.6 billion to transnational cryptocurrency fraud: Chinese businessmen collude with Southeast Asian cryptocurrency money flow networks.
