Bitcoin ETF and ETP | Circle: If the US approves ETF, it will outshine a bunch of Bitcoin investment products in the EU
Patrick Hansen, EU Policy Director at stablecoin issuer Circle, stated today that if the United States successfully approves a Bitcoin spot ETF, it will make the EU's Bitcoin investment products completely uncompetitive.
Bitcoin ETFs in πΊπΈ vs. Bitcoin ETPs/ETCs in πͺπΊ
While several #BitcoinETFs are about to be approved in the US, EU investors won't be able to invest in these. In general, in contrast with the US, EU ETFs (UCITS) cannot be used for single assets like bitcoin or gold.
Instead,β¦ pic.twitter.com/zCwr61ALdL
β Patrick Hansen (@paddi_hansen) January 8, 2024
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Comparison of Bitcoin ETF and ETP
Patrick Hansen believes that although Bitcoin ETFs are about to be approved in the United States, EU investors cannot invest directly.
Generally speaking, compared to the United States, EU ETF UCITS cannot be used for single assets such as Bitcoin or gold.
Instead, Exchange-Traded Products (ETPs), especially Exchange-Traded Commodities (ETC) and Exchange-Traded Notes (ETN), have been available in Europe for many years, but the largest Bitcoin ETC fund in Europe has a fund size of only 1 billion euros.
Lower Fees for US ETFs!
Patrick Hansen stated that the fees for US ETFs are usually lower than EU UCITS funds, but the difference in fees between future SEC-approved US Bitcoin ETFs and current Bitcoin ETP/ETN fees in Europe will be even more significant.
The average Total Expense Ratio (TER) of the existing top 10 ETP/ETN is 1.047%, while the average fees of the 10 upcoming Bitcoin ETFs, excluding GBTC, are less than half of that, at 0.451%.
Capital Protection with ETFs
Patrick Hansen mentioned that EU UCITS funds are not only more than twice as expensive as US ETFs, but the structure of ETPs and ETNs remains that of debt securities. This means that individual protection for investment capital is not available in the event of issuer bankruptcy. Therefore, if the issuer or investment company is insolvent, investors in ETC/ETN may lose their funds. In contrast, capital invested in ETFs is protected.
US Cryptocurrency Products to Surpass EU
Patrick Hansen stated that although the US took a few years to catch up, if these Bitcoin ETFs are approved as expected, US investors will have a cheaper and safer option for Bitcoin-based secure products than EU investors. Therefore, due to the much larger overall US capital market, US Bitcoin ETFs will immediately surpass their EU ETP/ETN counterparts in terms of scale.