Anyone who closely follows the cryptocurrency industry will know that applications to launch Bitcoin Exchange Traded Fund (ETFs) have been backing up like planes waiting to land at Heathrow. Although some Bitcoin ETFs have been approved around the world (in Canada, Brazil and Dubai), the U.S. Securities and Exchange Commission has so far rejected every application and no Bitcoin ETFs have ever been approved in Europe – until now.
The process to launch Europe’s first Bitcoin ETF Tier 1 firms such as CBOE and Fidelity Digital Assets has not been straightforward for us at Jacobi Asset Management. But this week’s announcement that our application has been approved by the Guernsey Financial Services Commission can be seen as great news for the crypto industry, still seeking mainstream credibility with the institutional market.
Our founders have always been concerned about investors putting money into something they don’t fully understand. For the uninitiated – and even sometimes for the more experienced – investing in cryptocurrencies still comes with a high degree of risk. Whether it is lost private keys, exchange hacks, flaws in smart contracts or outright frauds such as the recent disappearance of Evil Ape with $2.7 million, the loss of cryptocurrency or token-based investments is clearly not uncommon.
Just recently CoinDesk reported that a vulnerability had allowed hackers to bypass Coinbase’s multi-factor authentication, affecting at least 6,000 of its customers. When you’re talking about your institutional client’s funds, that’s not something you ever want anyone to experience – or ever want to be liable for as an asset manager.
This is just one of the reasons why a Bitcoin Exchange Traded Fund is so needed for the institutional market. ETFs allow investors to buy and sell new financial instruments like Bitcoin more easily and give them the opportunity to integrate digital assets into their existing portfolios, without requiring any specialist knowledge or technical expertise.
An open-ended fund, like an ETF, also has the advantage of being regulated and insured, making it more secure for investors. So ETFs provide a safe way to invest in new financial instruments with ease.
Why does this matter for the industry? The adoption of ETFs will increase awareness and consideration for crypto investments within traditional investment channels. This shift will normalise more diverse portfolios, eliminating the barrier to entry for previous skeptics. Today it starts with Bitcoin, however, we see this expanding to other currencies as we – and others around the world – start to scale.
This is why we’re proud to be launching Jacobi Asset Management and so pleased that our first product is a Bitcoin ETF. Our goal is to remove three significant hurdles to investment: adding a regulatory safety net, removing the technology risk associated with wallets and exchanges and ensuring no counterparty risk involved in investing in Bitcoin and other digital assets.
As a bitcoin architect, I have always been looking at ways to make bitcoin more accessible to more avenues. Today I am excited about the explosion of innovation that has come about as a result of Bitcoin’s creation and believes that distributed ledger technology will be of fundamental importance in creating transparent delivery of assets, wealth and value.
With Jacobi, we are championing a world where investors can freely and securely embrace the opportunities being opened up by this new digital economy. The launch of our Bitcoin ETF steps one on that journey to widen access to the benefits of digital assets for all.
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