Eurex Launches Bitcoin ETN Futures Amid Growing European Demand

Exchange traded notes (ETN) backed by bitcoins are coming to Europe, marking the first regulated market for bitcoin-related derivatives and futures contracts that will be available on a crypto exchange traded product for investors in Europe. 

Europe’s largest futures and options exchange Eurex will list bitcoin ETN futures starting on September 13. 

In general, as adoption of digital assets increases, institutional investors will want more services and accessibility to the industry. The appeal of digital assets to institutional investors has grown in recent years, with the potential upside gaining 13 points among European investors since 2020, according to research from Fidelity Digital Assets’ 2021 Institutional Investor Digital Assets Study. 

The region’s institutional crypto exposure has grown to 56%, up from 45% from the year prior. About 77% of European institutional investors also believe digital assets should be part of a portfolio, up from about 66% of investors in 2020, the study also showed. 

“There is significant demand from institutional investors to gain bitcoin exposure in a secure and regulated environment. We are pleased to be the first regulated exchange to offer this innovative contract,” said Randolf Roth, an executive board member of Eurex.

The futures contract is based on ETC Group’s BTCetc, or Bitcoin Exchange Traded Crypto, which is listed on the Frankfurt Stock Exchange and has been one of the most heavily traded ETF/ETN contracts on the German exchange Deutsche Börse XETRA since its launch in June 2020, the company said. Since then BTCetc has been listed on a handful of European exchanges, ETC Group said. 

The new futures contract will be traded in euros and physically delivered in BTCE, which is fully backed by bitcoin and investors can redeem it for the underlying bitcoin, ETC Group added. 

“This move will allow a greater number of market participants to trade and hedge bitcoin, with this new future being treated in the same way as any other derivatives contract in terms of central clearing, netting, and risk management,” Roth said. 

The expansion follows a recent attempt to crackdown on cryptocurrency asset transfers in the European Union, Blockworks previously reported. In July, policy makers in the EU proposed a rule that would require companies that transfer digital assets to report details of senders and recipients to authorities, in an effort to crackdown on dirty money. 

Separately, the European Central Bank’s Governing Council launched its 24-month investigation phase of a digital euro in July. The digital euro, which would be categorized as a Central Bank Digital Currency, would have to help prevent illicit activities and avoid any “undesirable impact on financial stability and monetary policy.”

The project also would complement cash, not replace it, the statement said. However, in June, the ECB said that central banks that chose not to establish official digital currencies are risking losing autonomy and control over their financial systems, Blockworks previously reported.

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