ETPs (exchange traded products) are financial instruments that trade on stock exchanges, just like shares. ETPs are passive investment vehicles that provide a transparent and secure way to gain exposure to a benchmark or specific asset class.
Exchange-traded products (ETPs) in Europe are divided into the following three categories: ETFs (Exchange Traded Funds), ETCs (Exchange Traded Commodities), and ETNs (Exchange Traded Notes). They are types of securities that track financial instruments, underlying securities, or an index. Listed on stock exchanges, such products trade similar to stocks meaning their prices can fluctuate from day-to-day and intraday. However, the prices of ETPs are derived from the underlying investments that they track, as they are designed to replicate the return of an underlying asset or benchmark.
ETCs are debt instruments that are collateralized (asset-backed), open-ended (no maturity date) and pay no interest. They trade on stock exchanges, like conventional stocks, but track the price of a commodity or a commodity index. This allows investors to gain exposure to the underlying commodity without directly buying the physical commodity or commodity futures contracts. In this sense, ETCs have a share price that moves up and down as the price of the underlying commodities fluctuate in value - in this case - the value of the underlying cryptocurrencies. Popular ETCs exist on e.g. precious metals (e.g. gold as the underlying commodity), and in case of ETC Group's products, the underlying commodity is cryptocurrency such as bitcoin.
Contrary to ETCs, ETFs must ensure a minimum level of diversification and may not hold any physical commodities as per regulatory guidelines. ETCs on the other side offer the possibility to invest in single commodities such as precious metals with ease. Most of the precious metal ETCs (Gold, Silver, Platinum, Palladium) generally indicate the spot price and are physically secured. This means that e.g. physical gold bars are stored in treasury of a trustee as security in case of physically secured gold-ETC. The issuer risk is thereby eliminated.
Similar to physically backed ETCs on precious metals, ETC Group's cryptocurrency ETCs are 100% backed stored with a regulated specialized custodian. The digital assets stored in custody serve as exclusive collateral to units outstanding, and are never used for lending transactions or similar.Security over the digital asset collateral to investors, and this pledge is enforced by a reputable trustee for the benefit of investors.
In everyday conversation, an exchange-traded commodity (ETC) could refer to a commodity exchange-traded fund (ETF), but an ETC is actually a product name for a specific type of security. In the context of ETC Group, the traditional acronym has been tweaked into "Exchange Traded Crypto". From a structural point of view and collateralization aspect it is essentially the same product type.
Yes, for every unit of BTCetc there is a pre-defined amount of bitcoin stored in regulated custody (1 unit = 0.001 bitcoin at issue date, then this value decays at the rate of 2% per year accrued daily, which represents the management fee). Statements are regularly produced by the independent Administrator verifying that bitcoin in custody is always more than sufficient to cover all units of BTCetc in circulation.
Yes, for every unit of ETC Group's products there is a pre-defined amount of the underlying cryptocurrency stored in regulated custody with BitGo Trust Company, a specialized custodian purpose built for the safekeeping of digital assets. Assets stored in custody serve as exclusive collateral to back the units outstanding, and are never used for lending transactions or similar. Security measures such as deep cold storage and multi-signature encryptioon are in place to keep the assets secure.
ETC Group's ETCs can be purchased with fiat currency (e.g. Euro) on regulated stock exchange using your conventional broker or bank. Simply search for the respective ISIN, ticker symbol (e.g. BTCE) or other product code on your platform.
Professional investors can get in touch with the Issuer's Authorised Participants for inquiries on OTC trades and block trading possibilities.
The Issuer has partnered with world-class liquidity providers (LPs) and Authorised Participants (APs) to ensure that ample liquidity is available on exchange (secondary market) and that investors can additionally create or redeem units of ETCs on the primary market as well.
Because ETC Group´s products such as BTCetc can be redeemed for cryptocurrency, the price of the ETCs faithfully track the value of the underlying cryptocurrency they track. Any temporary dislocation to the value of the underlying cryptocurrency will be seen as an arbitrage opportunity by market makers and traded away instantly.
The net asset value (NAV) of an ETC represents the net $ value per underlying cryptocurrency for each unit on a specific date or time. The NAV per unit for ETC Group products is calculated once a day using the Bloomberg CFIX index prices at 4pm EST.
While the NAV is fixed and calculated in daily intervals, the market price per unit of ETC will differ as the price of cryptocurrency fluctuates over the course of the exchange trading day.
Yes, if you are e.g. an institutional investor or professional investor this is possible via the network of Authorised Participants. Size restrictions apply to the amount of bitcoin required. Investors would need to open an account with one of the APs and would need to have undergone KYC/AML on the legal entity investing and on the bitcoin itself.
To purchase ETCs on exchange through your broker, you would need to buy a minimum of 1 unit of the respective ETC which equates in value to a predefined amount of cryptocurrency.
The commission fee for trading on exchange or OTC is the fee charged by your broker or bank. Every ETC is subject to a yearly management fee which is deducted from the ETCs’ Cryptocurrency Entitlement via diminishing entitlement to the underlying cryptocurrency.
ETC Group's securities are listed across exchanges such as Deutsche Börse XETRA or SIX Swiss Exchange, and passported across mulitple European countries. For each ETC there is information on the listing venues available under the menu point trading information.
Investing in ETCs is as simple as buying shares through your broker or bank. Unlike investing directly in bitcoin or other cryptocurrencies, there is no need to engage with the technical challenges of setting up a cryptocurrency wallet to store cryptocurrency. Your ETC units are safely held with your broker or bank, thus removing the risk of losing your investment due to a lack of knowledge of how cryptographic keys work.
ETC Group’s ETCs are traded on stock exchanges such as XETRA or SIX, some of the largest exchanges in Europe. As such stock exchanges are regulated, this means that investors can trade with confidence knowing that all market participants are strictly vetted and carefully monitored to prevent market abuse. The alternative is to buy bitcoin and co. on cryptocurrency exchanges, many of which are unregulated or do not have such strict security and compliance standards.
Your ETC units can also be redeemed directly for the underlying cryptocurrency. As an additional layer of protection for investors, every transaction must be confirmed by the issuer and a reputable third-party administrator to ensure that no cryptocurrency can be misappropriated due to misconduct or negligence from side of the Issuer.
The Issuer stores the cryptocurrency backing the products with BitGo Trust Company, a secure, regulated custodian purpose built for holding digital assets. Strict KYC and AML standards ensure that the provenance of all cryptocurrency in custody has been vetted. Deposits are insured by Lloyds of London against hacking and white-collar crime up to the value of $100 million. BitGo is a regulated trust and cryptocurrency is stored air-gapped in cold storage in their vaults.
Our ETCs are regulated financial instruments under MiFID II and are regulated in each jurisdiction where they are traded - for example in Germany our ETCs trade on Deutsche Boerse’s XETRA exchange and regulated by BaFin (German Federal Financial Supervisory Authority).
Our ETCs have been engineered with the security of the investor in mind. When e.g. units of BTCetc are created, the equivalence in bitcoin is stored at a secure, regulated and insured custodian. Any transactions related to the creation and redemption processes are verified by an independent Administrator. The Administrator can only be replaced with the approval of the Trustee. The Trustee holds security interest over the assets in custody and in the highly unlikely case of the Issuer default, would step in to make sure bondholder obligations are settled in a timely and orderly fashion.