Topic: ETC Group to launch bitcoin ETP on Deutsche Boerse - page 4. (Read 1565 times)

Gentle reminder.
Today is the day of the first trading of this product.
I fear a BAKKT-style launch. Great expectations, but delusion.
We will see. Your fellow Fillippone still has to discover the wallet addresses (should be public) where to track ETC holdings.
I will keep you posted.


EDIT: Nothing is currently trading, apparently delayed until tomorrow.

As far as I know the product has been already approved.
Citing the previous article:


Listing should commence on Jun 17th.

If you have different information, please share.

Regarding BitGo cooperation, yes this is certainly an interesting topic under many aspect. I suspect they will "analyse" the bitcoin they buy with a certain degree of care. It wouldn't surprise me giving priority to "clean bitcoins" e.g. Bitcoins from government auctions or coinbases.  (block rewards, not the anti-bitcoin organisation).

It´s not through yet, it still needs the Bafin confirmation. That could take several weeks or make it even outright impossible to launch. It´s a good idea and worth watching how it develops but at the moment it´s just an announcement for a future release. Beside that, I don´t know how far their custody provider BitGo is cooperating with the German regulatory folks already, could be another obstacle if they need to apply for a certain license.

A few more detail on the more "institutional money relevant" aspects of this product.

There is a nice read about this ETP from a traditional ETF news outlet:

ETC Group to debut with bitcoin ETP on Xetra



First of all: what does it means centrally cleared?
When you buy this product, you are not buying from the issuer, but from the German Stock Exchange, who in his turn, buys it from the issuer. So the exchange is acting like a clearing counterpart, who "untie" the credit relations between the two original counterparts, who are not facing themselves directly but are only facing the exchange.
This means that if the issuer defaults, you are not facing a defaulted entity, but the central clearing counterpart (CCP) who is kept liquid.
To sum up, the investors can actually get exposure tho this product neglecting counterpart risk, as the only counterpart they are facing is the German Xetra, which is one of the lowest risk counterparts in the world.

Also, another interesting piece of information I could, discover elsewhere:


So you are free to reclaim your physical bitcoin, but not really incentive to do so. Probably it is just a fail-safe mechanism to get hold of your possession in case there is a problem.
If an investor wants to get long exposure to physical bitcoin I would think about BAKKT 1 day futures, for example, just to name something very closely related to legacy exchanges.

Oh, sorry, I am italian, so it is not in my mind that you have to pay taxes on your crypto-gains. And also because I want to buy my coins in a KYC respectful way (KYC is bad), and I adverse anti-bitcoin organisations who sell my data to the government.

If you are referring to institutional investors, those who cannot dodge the legalised theft, well, yes. I do agree, but that is the only point of paying that huge premium.
But again, competition will eventually lower this premium in the long term.

It's the one and only Bitcoin-related product you can have in US tax advantaged wrappers like 401ks and IRA accounts and so on. There's nothing else that's been built to be eligible for it. That makes it compelling in a way nothing else is at the moment - to Americans.

I am not sure I understand which tax advantage, specific of GrayScale, you are referring to. Because if it is not specific to Grayscale, if it can be replicated with lower fees, it would be vastly superior. If it's specific to Grayscale please make me clear why it is different from any other ETF.

It's the tax advantages that are attracting people as much as anything. There's no other product at present that can do the same thing. That 2% and whatever whacky premiums there are pale in comparison to the tax bill on a monster rise.

Just as cross link, I've posted this into press too back then: https://bitcointalksearch.org/topic/2020-06-09-german-stock-exchange-lists-bitcoin-backed-etc-5254440
Since I see this as an European version of Bakkt, it's a great support for European institutional money flow into Bitcoin market.
Thus cannot be bad, since it's truly backed with actual Bitcoin.

This could have been one of the reasons for the current price movements too. "Buy on the rumors, sell on the news" (or maybe I'm wrong)

Grayscale is a poor investment choice.
Basically, new entrants pay a higher premium to insiders, only to buy artificially scarce shares.




https://twitter.com/RyanWatkins_/status/1271097895308218369

An ETP is immune from this fraudulent mechanism.
This is why 2% running fee is a steal!

I know right off the bat BitGo is going to be charging somewhere in the realm of 1% for all fees every single year (transfer fees, custody fees, and so on) The other 1% is pretty steep, I'd understand if we were talking somewhere in the realm of 1.25 or 1.5 -- but 2%, ouch.

We both totally know the type of person that is going to use this isn't going to worry about these slight differences, at least at first. But yeah, you're totally right in regards to competitive pressure is going to bring this down substantially in the future. Once their are a few more BitGo custody types and the demand is present in peoples regular retirement accounts.

Btw -- traditional etf's may average in the realm of .5-.7% -- but that shouldn't be the baseline as those are literally robbing you. Fidelity/Vanguard/ETrade/Schwab/BlackRock all have funds that follow the direction of the US stock market and cost from 0-.1% (Yes, I wrote 0, Fidelity, lol)

I see only one big loser in this story: Grayscale.

They are selling their shares at an inflated premium against the NAV.


This premium is quite consinstent:



Grayscale Bitcoin Trust Premium to NAV:30.40% for June 10, 2020

In the past, it has been consistently above 100% during BTC pumps back in 2017.
This meant buying bitcoin at double the market price.

So I think that paying 2% running cost against 30% upfront cost has some kind of rationale here.

Also, this bodes badly for Grayscale, who won't be anymore able to pump the price of their shares too much without losing inflows from clients looking for cheaper options.
 

An article on the same subject by Coindesk.

Deutsche Borse Exchange to List New Bitcoin Exchange-Traded Product

The interesting bit on this article is the amount of surcharge of this ETP compared to others:

So, basically, 1.3% to get rid of all the custody, fiscal and regulatory hassles of being long bitcoin.
I think it's not a bad deal, in addition to that, competitive pressure will make this number go down in the future.

Very, very interesting to see -- though that expense ratio is TOUGH -- I guess that's the price you pay to have everything insured and held by BitGo. Just tough to see people not only giving up their coins (the good ole, not your keys not your coins), but also paying someone else to hold their coins.

Insurance, regulations, and all of that -- I get it.

Why not just go and buy a trezor, load some coins up onto it, and split your backup into some safe places. Probably cheaper then using this if you're putting in a substantial amount of money.

Still big news though, hopefully adoption and all that can follow! Would be great to be able to spend my BTC (and really any crypto, doesn't matter to me) in real life more often.

Like everything else that was going to 'save' us, it only counts when it counts. These things certainly do not create any hype, they will definitely empower the hype when it arrives from other sources. Anything that pops up on your legacy platform is many notches above having to photograph your arse to get on Yobit.

Both points are very true.
Germany has a very crypto-friendly regulation. They were the first in the euro area to adopt the AML5 European regulation, that enabled German banks to take custody and trade bitcoin with clients (only to be beaten on the release time by the Italian soft bank Hype).

Also very true the analogy with Bakkt. We expected the floodgate of institutional money to open and flood bitcoin with fresh funds. This didn’t happen with big disappointment and also with some pain by speculators.
Will this time be different? There is some difference, the instrument has a different target, more focused on retail, rather than speculators like the CME derivatives. Also, it is redeemable in physicals bitcoin. Something that it is surely not possible in traditional markets.
We will see.

Well, Germany is actually quite crypto friendly, they had laws from very early on and they have allowed people to buy and sell easily and even had tax in place, they are always that organized whatever the topic is so it wasn't really a shock. It was only a matter of time someone did something like this on a bigger deal and obviously it is going to be big when it starts.

Unfortunately people put too much into stuff like this and expect a ton, remember the Bakkt times? When it first started everyone was expecting billions of dollars but that wasn't the case so there was a big sell after that when people saw it, what happened? It got bigger and bigger over time and now it is quite good in my opinion, but they weren't able to wait for it and wanted this on the first day.

I don't expect an immediate increase in price due, most of the purchases happen off exchanges and those that do happen on exchanges are done through an order routing process so there is no impact on the market price.
It's difficult to ascertain what increases the price long term, but greater liquidity and adoption would be a welcome development.

I doubt it will be huge, we already have plenty of platforms for Bitcoin derivatives, and nothing big happened, unless there's a strong proof that the price rise during the 2017-2020 period can be attributed to them. It's great that more liquidity is coming, but let's not create false expectations, we've already had so much disappointment in the past with all the ETF hype, when people expected it to launch the price to the moon.

In addition to not being able to market their shares, existing investors who hold them would be looking to sell them off at a lower premium to avoid being bad holders. This action could further drive the premium down causing more losses.