Invesco enters crypto ETP space with bitcoin launch

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Deepens Partnership with CoinShares

Invesco is taking its first steps into the cryptocurrency exchange traded products (ETP) space in Europe with the launch of a bitcoin strategy.

The Invesco Physical Bitcoin ETP (BTIC) is listed on Deutsche Boerse with a total expense ratio (TER) of 0.99%.

Physically supported, BTIC tracks the Bitcoin CoinShares hourly benchmark index rate to provide the price performance of the underlying fees minus.

Marketed to institutional investors, BTIC offers enveloped exposure to bitcoin, which represents 42% of the $ 2 billion digital asset market.

Custody of bitcoins held on behalf of BTIC will be carried out by Zodia Custody, registered in the UK and registered by the FCA.

Zodia achieved regulated status at the end of this summer and was incubated by SC Ventures, the innovation arm of Standard Chartered. Northern Trust is a co-investor of Zodia and will also act as a director of BTIC.

CoinShares, which partners with Invesco on the Invesco CoinShares Global Blockchain UCITS (BCHN) ETF, will serve as both index sponsor and executing agent for the ETP.

Gary Buxton (photo), head of ETF EMEA and indexed strategies at Invesco, told ETF Stream: “We have been working on the product since mid-2018. still many aspects of the market that we weren’t comfortable with – custody being at the top of this list.

“Over the past two or three years we have tried to structure a product that resembled, from an institutional point of view, as close as possible to a traditional ETF like our gold structure, and which was the driving force behind the timeline. by BTIC.

“We have been pushed over the past two years by institutional clients and had to consider how we can properly access this space. Most of the discussions we have with clients aren’t really about bitcoin itself, but more about accessing bitcoin and how you feel comfortable with segregation, how you feel about it. comfortable with evaluation. Really, one of the strengths of ETPs is as an access vehicle.

Explaining the decision to go for physical replication rather than futures based, Buxton added, “Physical bitcoin is a more observable market. One of our concerns was the depth of synthetic liquidity as well as what it might have on valuations over time and this is something we weren’t entirely comfortable with.

“It’s not an aversion to synthetics; it is about how well physical or synthetic is appropriate for a particular type of asset. We were just more comfortable with physical assets in this case, but it’s quite conceivable that synthetic could become interesting in the future as well. “

The arrival of BTIC may not come as a surprise to those keeping a close eye on the ETP crypto space. In July, Buxton hinted at seeking an increased presence in digital assets following the announcement of the partnership with CoinShares on BCHN.

The question now is whether other major ETF issuers in Europe will follow suit. In May, Matteo Andreetto, head of SPDR ETF, EMEA activities at State Street Global Advisors, revealed at ETF Stream’s ETF Ecosystem Unwrapped event that his company is keeping a close eye on the space.

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