European crypto enthusiasts are eagerly anticipating the approval of 11 spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC), driven by FOMO (fear of missing out). Notably, Europe already boasts a range of products, including exchange-traded products (ETPs) for retail investors, making it a more progressive region for cryptocurrency offerings. European ETP market players such as 21Shares, CoinShares, WisdomTree, VanEck, Valour, Invesco, Hashdex, and ETC Group have long provided investors with exposure to cryptocurrencies through spot Bitcoin ETPs.
The introduction of Bitcoin Tracker One by Swedish XBT Provider AB in May 2015 marked a significant milestone as the first Bitcoin-based security on a regulated exchange. Europe's regulatory landscape has facilitated the existence of euro-denominated Bitcoin securities, such as Bitcoin Tracker EUR on Nasdaq Nordic, launched in October 2015.
However, the regulatory framework in Europe poses challenges for the listing of a Bitcoin ETF. Laurent Kssis, director of financial services firm CEC Capital, explained that, under European UCITS laws, a Bitcoin ETF is unlikely to materialize, given the definition of an ETF as a basket of stocks with diversified investments, where no single component has an allocation exceeding 20%.
The U.S. spot Bitcoin ETF experienced an impressive debut, recording over $4 billion in trading volume on its first day. Noteworthy contributors include BlackRock products, accounting for a quarter of trading volume, and the Grayscale Bitcoin Trust (GBTC), which, converted to an ETF, made up almost half of the trading volume.
Globally, cryptocurrency ETFs and ETPs demonstrated substantial growth, increasing by 119.6% in the first 11 months of 2023, as reported by ETFGI, an independent research and advisory firm. November alone witnessed net inflows of $1.31 billion, bringing the year-to-date net inflows to $1.6 billion. In the European region, German and Swiss-listed cryptocurrency ETPs experienced significant inflows, reaching $663 million, with net inflows of $434 million in 2019. Projections suggest that these assets under management (AUM) could represent 22% and 13%, respectively, by 2023, according to ETF Stream.
