ETF issuers cannot afford to avoid cryptocurrency market any longer

Invesco is the latest issuer to enter the crypto ETP space

Executives from major ETF issuers will be paying close attention to the latest launch coming to the European ETF market. After months of rumors, Invesco finally made your long-awaited entry in the cryptocurrency exchange-traded (ETP) space with the launch of the Invesco Physical Bitcoin ETP (BTIC).

Invesco is the second issuer with more than $ 25 billion in assets ETF under management (AUM) in Europe after Wisdom Tree to make the big leap into the crypto space.

The similarities to the gold exchange-traded commodity (ETC) space are apparent. WisdomTree - through your acquisition of ETF Securities in 2018 - manages the world's first gold ETC launched in 2003, while Invesco currently manages Europe's largest ETC, the Invesco Physical Gold ETC (SGLD), which is home to AUM $ 14.2 billion.

Meanwhile, comparisons between the underlying assets - bitcoin and gold - they have been constant amid the meteoric rise of the former in recent years.

As a research note from Robeco He said: “Like gold, bitcoin is scarce and durable. Furthermore, bitcoin exhibits high portability, is easily transactional, and programmable. What it lacks in relation to gold, of course, is a long history of being perceived as a store of value.

“Like digital gold, bitcoin has monetary value. In our opinion, the discussion about bitcoin's lack of intrinsic value is mostly irrelevant. As with diamonds, art, stamps, gold, and the US dollar, bitcoin does not provide cash flows. However, all of these asset classes have monetary value and most of them are considered a store of value.

Bitcoin ETPs have already started to make their mark on the European ETF market. The first bitcoin ETP, the 21Share Bitcoin ETP (ABTC), was only launched in February 2019, however, Europe's largest crypto ETP, BTCetc Exchange Traded Cryptocurrency (BTCE), has already surpassed the $ 1bn AUM barrier and now totals $ 1.4bn.

As regulatory headwinds, such as the UK's ban on sale of crypto ETNs for retail investors: decrease, assets will only increase.

This growth is what has caught the attention of Invesco's EMEA ETF Director Gary Buxton who revealed to ETF flow the firm has been working on a crypto ETP since 2018.

Like Robeco, Buxton sees many similarities with the precious metal: “In the last two or three years, we have tried to structure a product that looks, from an institutional point of view, as close as possible to a traditional ETF like our gold. . structure, and that has been the driver of the BTIC timeline.

"Bitcoin is very close to gold in the sense that investors see it as a diversifier from their traditional investments, an alternative asset with defined and limited supply."

The focus is now on the other major players in Europe. State Street Global Advisors (SSGA) has maintained a close eye on the market However, over the past year, there is still no news from traditional European asset managers, such as Amundi, DWS and UBS asset management.

As a result, these players, and others, risk losing out to companies like Invesco if the crypto market continues its rapid expansion as many believe it will.