The introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States is having an impact on Europe, but investors on the continent remain cautious about investing in the cryptocurrency space.
Martijn Rozemuller, CEO of VanEck Europe, spoke exclusively to Cointelegraph about the increasing interest of institutional investors in spot Bitcoin ETFs in the US, highlighting the contrasting situation in Europe.
Rozemuller stated that US investors are more willing to take educated risks and are more accustomed to trading on exchanges compared to some European investors who still rely on mutual funds recommended by their banks or fund managers.
He pointed out that in Europe, curious investors in cryptocurrencies typically include retail users, smaller independent wealth managers, and family offices. However, despite having several exchange-traded notes (ETNs) that are properly licensed, local regulators have explicitly stated that they are not in favor of crypto-related investments.
The reason why Europe does not have spot Bitcoin ETFs lies in the regulatory framework. Under the Undertakings for Collective Investment in Transferable Securities (UCITS) regulation in Europe, investment products based solely on a single underlying asset are not allowed. Rozemuller explained that there are rules for diversification within the UCITS framework, making it impossible to have an ETF with a single exposure.
VanEck Europe has taken an innovative approach to launch investment products with direct exposure to Bitcoin and other cryptocurrencies. They offer a range of exchange-traded products (ETPs) that ensure customers are served by a liquidity provider independent of the issuer in an open market. This approach ensures transparent price discovery and avoids issues like the Grayscale products in the US, where there can be a significant premium or discount.
The VanEck Europe Bitcoin ETN closely resembles spot Bitcoin ETF offerings in the US. The product provides exposure to BTC held in cold storage by Bank Frick in Liechtenstein. VanEck Europe has also launched Ethereum, Solana, Avalanche, and Tron ETNs with similar structures.
In addition to crypto-based ETNs, VanEck’s Crypto and Blockchain Innovators UCITS ETF (DAPP) aims to offer investors diversified exposure to listed cryptocurrency exchanges, miners, and infrastructure companies in the wider blockchain space. The DAPP ETF has a significant weight towards Bitcoin miners, with around 50% of its net assets comprised of shares in firms like Riot Blockchain, Marathon Digital, and Argo Blockchain.
Rozemuller also addressed the need for cryptocurrency ETPs or ETFs, explaining that many investors, particularly older generations, are not comfortable with self-custody and the risks associated with holding cryptocurrencies. Investment products that offer exposure to cryptocurrencies through conventional investment accounts and are managed by reputable services provide a middle ground for these investors.
Overall, while the US has seen the launch of spot Bitcoin ETFs, Europe’s regulatory framework and investor caution have prevented similar products from emerging in the region. VanEck Europe has found alternative solutions with its range of ETPs and ETNs, providing investors with exposure to cryptocurrencies in a regulated and accessible manner.