Delayed Launch of Europe’s First Spot Bitcoin ETF: An Analysis of Market Impacts & Regulatory Tensions

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Twilight sinking over a vast, futuristic cityscape, where architecture merges tradition and innovation. Towards the centre, a large, majestic ship symbolising Jacobi Asset Management is tethered, its launch delayed. Abstract representations of Bitcoin and traditional financial instruments coexist, with emphasis on Bitcoin, casting golden lights into the sky. The mood is tense anticipation of change. Artistic style: Futuristic Impressionism.

The eagerly anticipated debut of Europe’s first spot Bitcoin ETF, originally scheduled for 2022, is now eyeing a delayed liftoff in 2023 due to a combination of unprecedented market circumstances. Jacobi Asset Management, the London-based investment platform setting the stage for Europe’s maiden financial voyage into Bitcoin territory, found their original launch plan hampered by the seismic jolts sent through the market by the unexpected collapse of the Terra-Luna ecosystem and the FTX fall, both occurring in 2021. Hence, the postponement of the adventurous undertaking by Jacobi, garnered authorization from the Guernsey Financial Services Commission in October 2021, has been received.

There is a distinct contrast present between the Jacobi Bitcoin ETF and usual exchange-traded notes (ETNs) thanks to its central clearance and Fidelity Digital Assets-backed custody. This marked shift in the European cryptosphere moves financial instruments away from conventionally structured ETNs to funds, emphasizing the element of owning a stake in a fund’s underlying assets for ETF shareholders. Contrarily, ETN investors merely own debt security. ETFs are also not subject to leverage or derivatives usage, obviating potential threats of market manipulation emanating from these quarters.

However, despite Europe welcoming its first spot Bitcoin ETF in October, the United States Securities and Exchange Commission (SEC) has not shown a green light to any spot Bitcoin ETF submissions to this point. Despite this ongoing resistance, there are multiple institutional titans such as BlackRock and Fidelity that have freshly lodged applications for spot Bitcoin ETFs, maintaining their ambitions of becoming the inaugural US approved spot BTC ETF. This development gains more significance, considering the SEC has already given its nod to a few futures Bitcoin ETFs in 2021.

The main point of contention aggravating the Bitcoin ETF topic lies in what owning an ETN versus an ETF entails. More than simply owning debt security with the former, ETFs—being free from the risks of market manipulation due to leverage or derivatives—allow shareholders to own part of the fund’s underlying assets. Therefore, nations like the US that have not yet approved any spot Bitcoin ETFs are holding out against the oncoming wave of crypto-backed financial shifts that nations such as those in Europe have begun to adopt and integrate into their financial landscapes. This last stand of regulatory resistance might inevitably crumble in the face of a turning tide of crypto-integrated technology and finance in 2023.

Source: Cointelegraph

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