In a first, Eurex to launch ‘centrally cleared’ Bitcoin ETN futures

In a first, Eurex to launch ‘centrally cleared’ Bitcoin ETN futures

2021 saw a considerable rise in Bitcoin-based investment products, from Exchange Traded Notes (ETN) to Exchange Traded Funds (ETF). Countries such as Canada, and Brazil have already proceeded in this direction, while the US continues to be indecisive.

In a latest development, Bitcoin-based Exchange Traded Notes (ETN) will soon be available for European investors in the coming month. Europe’s largest futures and options exchange Eurex, revealed the same on their social media platform.

We’re excited to announce the launch of #Bitcoin ETN #futures. As the extension of the ETN traded so successfully on @Xetra, the new contract offers clients access to the price of Bitcoin in a regulated on-exchange and centrally cleared environment. https://t.co/N5A0EVqAYp pic.twitter.com/qr6firZWNX— Eurex (@EurexGroup) August 20, 2021

Moreover, this product will be the first regulated market in Bitcoin-related derivatives in Europe and will comply with the region’s “centrally cleared environment.” As mentioned in the official press release,

“With the new contract, Deutsche Börse Group’s derivatives arm offers clients access to the price of Bitcoin in a regulated on-exchange and centrally cleared environment. This offering will be the first regulated market in Bitcoin-related derivatives in Europe.”

The ETN will track the Bitcoin Exchange Traded Crypto, listed on the Frankfurt Stock Exchange, according to the official post. This product has been amongst the most traded ETNs and ETFs on the platform since June 2020.

Importance of this move

As the Eurex wesbite noted on this topic,

“This set-up allows investors to track the price development of Bitcoins in a fully regulated on-exchange environment and based on a transparent price discovery of the underlying ETN.”

It also mentioned that both the underlying ETN, as well as the futures, “trade, clear and settle on Deutsche Börse Group’s proven infrastructure.” In addition to this, the website stated that Bitcoin ETN futures are “centrally cleared like any other derivatives traded on Eurex,” adding that, “Eurex’s standard clearing, netting, and risk management processes thereby come into effect, mitigating counterparty risk and reducing operational costs for market participants.”

Speaking about the increasing demand for “secure exposure” to Bitcoin, Randolf Roth, a member of the Eurex Executive Board said,

“…we are delighted to begin listing these Bitcoin ETN futures… This move will allow a greater number of market participants to trade and hedge Bitcoin…”

Furthermore, consider this, Fidelity Digital Assets’ 2021 Institutional Investor Digital Assets Study. It mentioned that the majority of institutional investors’ crypto exposure surged to 56%, up from 45% from the prior year. Also, about 77% of European institutional investors believe digital assets should be part of a portfolio. In 2020 the this figure was at 66% of investors.

ETC Group, a crypto investment firm also praised the aforementioned development, in a series of tweets.

The announcement that @Eurex will list a futures contract based on #BTCE is a game changer, it firmly establishes BTCE as the benchmark Bitcoin #ETP and go-to product for #Bitcoin price discovery.https://t.co/jBZOwN58E3— ETC Group (@ETC_Crypto) August 23, 2021

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