Eurex, the leading European derivatives exchange, announced the launch of Bitcoin ETN futures. The new contract offers clients access to the price of Bitcoin in a regulated on-exchange and centrally cleared environment.
This offering will be the first regulated market in Bitcoin-related derivatives in Europe. Launch of the new contract by Deutsche Börse Group’s derivatives arm is planned for 13 September. The futures contract is based on the BTCetc Bitcoin Exchange Traded Crypto (ISIN: DE000A27Z304), which is listed on the Frankfurt Stock Exchange and has been among the most heavily traded ETF/ETN contracts on Xetra since its start in June 2020.
Fully backed by Bitcoin
The Bitcoin ETN was equivalent to 1/1000th of a Bitcoin at launch and is fully backed by and redeemable in Bitcoin. The new futures contract will be traded in euro and physically delivered in Bitcoin ETNs. This set-up allows investors to track the price development of Bitcoins in a fully regulated on-exchange environment and based on a transparent price discovery of the underlying ETN.
Both the underlying ETN, as well as the futures, trade, clear and settle on Deutsche Börse Group’s proven infrastructure. Bitcoin ETN futures are centrally cleared like any other derivatives traded on Eurex. Eurex’s standard clearing, netting, and risk management processes thereby come into effect, mitigating counterparty risk and reducing operational costs for market participants.
Significant demand
“There is significant demand from instutional investors to gain Bitcoin exposure in a secure and regulated environment. We are pleased to be the first regulated exchange to offer this innovative contract. The new Bitcoin ETN futures enable investors to trade and hedge Bitcoin within Eurex’s proven trading and clearing infrastructure without the need to turn to unregulated crypto venues or set up a separate infrastructure, such as a crypto wallet. It is the logical extension of the ETN that already trades very successfully on Xetra.” - Randolf Roth, Member of the Eurex Executive Board
Meanwhile, Deutsche Börse has expanded its innovative offering of the world’s first centrally cleared Bitcoin ETN on Xetra with further ETNs on Ethereum, Bitcoin Cash and Litecoin. With an average monthly order book turnover of 1.0 billion EUR in H1/2021, Xetra has established itself as Europe’s leading exchange for crypto ETNs.
Ahead of the US
The regulatory environment in the U.S. hasn’t favored the crypto space, and now even less with the new infrastructure bill introduced a few weeks ago. Regulatory bodies like the Securities and Exchange Commission (SEC) are currently stagnating to approve a single BTC ETF application. In this regard, Europe is proving to be the friendlier environment for crypto products compared to the U.S.
Several European laws now favor cryptocurrencies more than ever. German-based institutional funds will be able to allocate as much as 20% of their portfolios in digital assets. The initiative came after various local organizations demanded exposure to crypto-related products.
