Stablecoin issuer Circle’s EU Strategy Director, Patrick Hansen, stated today that if the US successfully approves a Bitcoin spot ETF, it will render the EU’s Bitcoin investment products completely uncompetitive.
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Comparing Bitcoin ETFs and ETPs
Lower Costs for US ETFs!
More Secure ETF Capital
US Cryptocurrency Products Surpassing Europe
Patrick Hansen believes that although Bitcoin ETFs are about to be approved in the US, EU investors will not be able to invest directly. Generally, compared to the US, EU ETFs (UCITS) cannot be used for single assets such as Bitcoin or gold.
Instead, exchange-traded products (ETPs, particularly exchange-traded commodities ETCs) and exchange-traded notes (ETNs) have been in existence in Europe for many years, but the largest Bitcoin ETC fund has a total size of only 1 billion euros.
Patrick Hansen stated that the costs of US ETFs are typically lower than those of EU UCITS funds, but the difference between the future SEC-approved US Bitcoin ETF costs and the current Bitcoin ETP/ETN costs in Europe will be even more astonishing.
The average total expense ratio (TER) of the existing top 10 ETPs/ETNs is 1.047%, while the average cost of the 10 upcoming Bitcoin ETFs (excluding GBTC) is less than half of that, at 0.451%.
Patrick Hansen stated that EU UCITS funds are not only more expensive than US ETFs by more than twice, but the structure of ETPs and ETNs remains debt securities. This means that invested capital cannot be individually protected in the event of issuer bankruptcy. Therefore, if the issuer or investment company becomes insolvent, ETC/ETN investors may lose their funds. In comparison, capital invested in ETFs is protected.
Patrick Hansen stated that although it took the US several years to catch up, if these Bitcoin ETFs are approved as expected, US investors will have a cheaper and safer option for choosing Bitcoin-based securities compared to EU investors. Therefore, due to the overall larger size of the US capital market, US Bitcoin ETFs will immediately overshadow EU ETP/ETN counterparts in terms of scale.
ETF
ETP
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