Author: Andrew Asmakov, Decrypt; Translation: Song Xue, LianGuai
Europe has become the first region to launch a Bitcoin exchange-traded fund (ETF) ahead of the United States. London-based asset management company Jacobi Asset Management announced today that the product will be listed on the Euronext Amsterdam exchange.
After receiving approval from the Guernsey Financial Services Commission (GFSC) in October 2021, the company initially planned to launch a Bitcoin ETF product last year.
However, due to the collapse of the Terra ecosystem and the bankruptcy of the FTX cryptocurrency exchange, it decided to postpone the launch, considering it an inopportune time.
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Today, Jacobi FT Wilshire Bitcoin ETF finally went live with the trading code BCOIN. It charges investors an annual management fee of 1.5%.
Jacobi Asset Management is responsible for the custody service of the fund, while Flow Traders plays the role of market maker. Authorized participants include Jane Street and DRW.
Jacobi CEO Martin Bednall stated, “The fund aims to provide institutional investors with a simple, secure, and transparent way to access Bitcoin while meeting their sustainability requirements. We believe that the launch of this ETF will be a catalyst for institutions adopting digital assets.”
Jacobi FT Wilshire Bitcoin ETF is also hailed as the first decarbonized digital asset fund that complies with the European Sustainable Finance Disclosure Regulation (SFDR) Article 8, which applies to funds that promote environmental and social objectives.
The company has partnered with digital asset platform Zumo to implement a verifiable built-in Renewable Energy Certificate (REC) solution, enabling institutional investors to trade Bitcoin while meeting their environmental, social, and governance (ESG) goals.
As the Jacobi CEO pointed out, RECs and offsets are fundamentally different and should not be confused. While offsets can be used for any aspect of a company’s carbon footprint (one offset represents one ton of CO2 equivalent), RECs are only related to electricity consumption (one REC represents one megawatt-hour of electricity).
The REC solution verifies the utilization of renewable energy, contributing to the overall decarbonization of the fund and compliance with sustainable principles.
Bednall stated, “This makes REC an ideal tool for cryptocurrencies, where the most significant part of the carbon footprint is related to electricity consumption. Additionally, according to the Kyoto Protocol, the use of RECs is a market-based accounting method. It can be used to claim full decarbonization, but the same cannot be said for offsets.”
The company emphasized that as an open-ended fund, its Bitcoin ETF will mark a significant shift from traditional exchange-traded notes (ETNs), which have been the most widely spread cryptocurrency financial instrument structure in Europe so far.
One major difference between ETNs and ETFs lies in the ownership structure and investment nature. With ETFs, shareholders own shares of the underlying assets held by the fund. On the other hand, ETN investors own debt securities.
“ETF has obtained the approval of regulatory authorities and is supervised by regulated managers. These managers sign off on all activities and regularly report to regulatory authorities. ETN does not have such an institution to provide this level of investor protection,” Bednall said.
ETFs are restricted from using leverage or including derivatives, which helps mitigate potential risks associated with market manipulation. In contrast, ETNs may utilize leverage or derivatives, introducing an additional layer of risk.
The launch of the Jacoby Bitcoin ETF also means that European investors will be ahead of their American counterparts in accessing this highly sought-after product.
Gemini, the cryptocurrency exchange led by the Winklevoss twins, was the first US entity to apply for a Bitcoin ETF a decade ago, and American investors have yet to see any such product.
The US Securities and Exchange Commission (SEC) has repeatedly rejected or delayed any applications received, citing market manipulation as one of the reasons.
After years of rejections, Bitcoin ETFs in the US are finally expected to receive approval from regulatory authorities, reigniting hope once again.
Recently, a new wave of applications has arrived at the doorstep of the US Securities and Exchange Commission, starting with Wall Street giant BlackRock entering the field last month, followed by more applications from companies such as Fidelity, Valkyrie, and Invesco.
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