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Crypto ETF Race Ramps Up as Deutsche Digital Assets Launches World’s First Macroeconomic-Driven Bitcoin ETP

Published July 3, 2024 12:34 PM
Teuta Franjkovic
Published July 3, 2024 12:34 PM

Key Takeaways

  • Deutsche Digital Assets has listed the world’s first macro-driven Bitcoin ETP on the Deutsche Börse Xetra platform.
  • The Bitcoin Macro ETP offers dynamic exposure to BTC and USDC, utilizing key macroeconomic factors to optimize Bitcoin exposure and enhance long-term risk management.
  • The crypto ETP market continues to grow with increasing product listings, growing assets, and new launches.

German crypto and digital asset firm Deutsche Digital Assets (DDA) has listed  the Bitcoin Macro exchange-traded product (ETP) on the Deutsche Börse Xetra platform.

The ETP, trading under the ticker symbol “BMAC ,” adjusts its Bitcoin exposure based on macroeconomic factors and has a total expense ratio of 2.00%.

DDA Launches Bitcoin ETP with Tax Advantages for German Investors

The “DDA Bitcoin Macro ETP” is 100% physically backed by a diversified portfolio of cryptocurrencies that form the Compass FT DDA Bitcoin Macro Allocation Index.

These assets are securely held in “cold storage” at a regulated custodian. The ETP provides dynamic and systematic exposure to BTC and USDC, optimizing Bitcoin exposure and enhancing long-term risk management using key macroeconomic factors, with a total expense ratio of 2.00%.

Any additional income generated by the underlying assets will be accumulated to the ETP, increasing the coin entitlement. Moreover, due to recent updates by the German Federal Ministry of Finance (BMF) on the tax treatment of virtual currencies and other tokens, German private investors could benefit from tax advantages. Specifically, the physical redemption option embedded in the ETP allows for capital gains to be tax-free after a holding period of 365 days.

Smart Beta Strategies Amid Rising Global Crypto ETF Inflows

The Bitcoin ETF/ETP is designed to offer systematic exposure to BTC and USDC, using key macroeconomic factors to optimise Bitcoin exposure while enhancing long-term risk management.

Volatility and drawdowns associated with cryptocurrencies are cited as some of the deterrents for retail and institutional investors by Marc des Ligneris  who heads quantitative strategies at DDA.

Efforts by DDA to develop smart beta strategies that will provide cryptocurrency exposure in a risk-managed manner over the long term and will reduce its exposure when major macroeconomic factors affect Bitcoin prices negatively.

ETFGI, an independent research firm, stated  that during May, crypto ETFs/ETPs listed globally saw net inflows of $2.2bn year-to-date bringing total net new inflows this year to $44.50bn according to ETFGI.

ETF and ETP growth
Credit: ETFGI

Crypto ETP Market Continues To Grow Despite Volatility and Regulatory Challenges

The number of crypto ETFs, ETNs, and ETPs listed globally continues to rise, with the sector boasting 208 products, 551 listings, and assets totaling $82.27 billion from 47 providers listed on 20 exchanges across 16 countries as of June, according to ETFGI.

Earlier this year, Figment Europe  Ltd, a provider of institutional staking infrastructure, and Apex Group listed two crypto ETPs on the SIX Swiss Exchange.

In May, 21Shares and WisdomTree launched their crypto exchange-traded notes (cETNs) on the London Stock Exchange (LSE), signaling a potential major shift in the UK’s attitude towards cryptocurrency investments.

This move is part of a broader trend where financial institutions and product providers are increasingly catering to the growing demand for crypto-related financial products despite the challenges and volatility associated with the market.

Despite the growing demand for crypto ETPs, institutions face challenges in buying and staking crypto directly. During the most recent crypto bear market, many ETPs faced closure.

In March 2023, 21Shares began delisting its Terra ETP  and terminated five other crypto ETPs due to low investor demand. These ETPs had been open for less than a year.

FCA Allows Crypto-Backed ETNs for Institutional Investors, Easing Previous Restrictions

The Financial Conduct Authority (FCA) announced that it would not oppose requests from exchanges like the London Stock Exchange and Cboe UK to introduce unleveraged crypto-backed Exchange-Traded Notes (ETNs) associated with Bitcoin or Ethereum.

However, the FCA specified that these financial instruments should be exclusively accessible to institutional entities, including investment firms, credit institutions, pension funds, and insurance companies. This development marks a departure from the FCA’s comprehensive prohibition on cryptocurrency ETPs and aligns the UK more closely with continental Europe, Australia, Brazil, Canada, and the US, where crypto ETPs are already available.

Despite this shift, the UK remains conservative compared to the broader global trend of allowing individual investors to engage with crypto ETPs.

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