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Asset owners and managers ready to jump into bitcoin ETFs

Although cryptocurrency investors are becoming more interested, regulators remain cautious

Asset managers and asset owners are eager to invest in bitcoin exchange-traded fund (ETFs), as soon as the regulators approve them and provided that they meet regulatory standards.

As issuers prepare to launch these products on the market, more ETFs (and exchange-traded bonds (ETNs),) are awaiting approval from regulators.

State Street has received at least three mandates to create bitcoin ETFs or ETNs. This, according to Mostapha Tahiri (the firm’s chief executive for Asia-Pacific), is an indication that institutional investors are increasingly interested in cryptocurrency and other digital assets.

“We are seeing increasing demand from clients to support their digital strategies. We have seen a 30% increase in client investments in cryptocurrency from February to April 2021, according to Tahiri, The Asset, in an interview.

State Street announced in April that it had been appointed administrator for a bitcoin-backed ETN by Iconic Funds BTC ETN GmbH. This subsidiary of Iconic Funds GmbH. After approval by the German securities regulator BaFin, the ETN will be listed at the Frankfurt Stock Exchange.

State Street announced in March that it had been appointed the Van Eck Bitcoin Trust’s fund administrator and transfer agent. This new ETF is currently being approved by the US Securities and Exchange Commission.

Tahiri states that while it is still small in terms of asset allocation, there is a lot of interest in bitcoin ETFs. It is becoming a major trend to link digital assets with ETFs.

Regulators are still cautious. This could be preventing us from seeing the acceleration we want. They want to ensure everything is in order so that it can be used as a test environment.

It is opening slowly but it is definitely on the horizon. Asset owners, who are our clients, have shown a lot interest in passive instruments, but not necessarily from asset managers.

The US SEC delayed approval of several digital ETFs in the meantime, including Van Eck Bitcoin ETF and Wisdom Tree Bitcoin ETF. These delays are considered a sign that the regulator is still cautious about the controls and risk management that would be associated with these new instruments.

“We have RFPs (requests to proposal) at the moment around ETF Bitcoin. Tahiri states that clients are ready for growth, and we are also ready for growth. We just need to ensure the regulations are in place.

Invesco plans to launch two ETFs that are cryptocurrency-focused, the Invesco Samsung Blockchain Economy ETF (and the Invesco Sky Crypto Economy ETF), both of which are still awaiting approval by the US SEC.

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