More European Stock Markets are Approving Bitcoin Trading
The demand from institutional investors toward bitcoin is increasing at a rapid rate. Professional traders and accredited investors are seeking for more exchange traded notes (ETNs) to trade bitcoin through a strictly regulated channel.
By law, certain organizations, individuals and firms are only permitted to invest in regulated financial instruments. Bitcoin is legalized in many countries including Japan, the Philippines, South Korea and the US, but in most cases, it does not qualify as a strictly regulated asset which investors can purchase.
Naturally, investors started to search for different methods of investing in bitcoin and other cryptocurrencies. Although most exchange traded fund (ETF) proposals for bitcoin investment vehicles were rejected by the US Securities and Exchange Commission (SEC) over the past 12 months, in Europe, many large-scale companies have been operating ETNs which can be traded over the stock market.
In Sweden, XBT Provider AB has been operating Bitcoin Tracker One, a bitcoin-based security traded on the NASDAQ OMX, a regulated stock exchange. In terms of liquidity, bitcoin remains as one of the most easily accessible and liquid assets in the world with a consistent daily trading volume of over $2 billion. Still, due to existing financial regulations, a fairly large portion of investors prefer to invest via Bitcoin Tracker One, which issues certificates to investors.
In an interview, XBT provider head of investor relations Ryan Radloff stated:
“There are three major reasons to consider a bitcoin ETN over physical bitcoin. The route to purchasing an ETN is via a familiar broker or brokerage platform and the ETN is listed on a trusted exchange. No new accounts are needed, no new verification steps required.”
More importantly, Radloff explained that investors can also benefit from tax advantages, especially if investors are based in the UK. Radloff added, “In the UK for instance, the bitcoin ETN is uniquely eligible for inclusion in a tax-advantaged SIPP account thus this type of investment in bitcoin may experience a more efficient tax treatment than simply purchasing bitcoin outright.”
Last month, local sources including TheStreet reported that Denmark’s Saxo Bank integrated the two ETNs offered by XBT to allow Saxo Bank users, clients and consumers to directly invest in bitcoin without any boundaries or regulatory conflicts. Saxo Bank head of markets Claus Nielson said:
“We have been following the development in cryptocurrencies closely and our Saxo Strategy Team has monitored and commented on the rapid development. We have now added two new listed instruments on the Saxo Bank platform that tracks the movement of Bitcoin and we will look into the client appetite as we are developing the future foundation for access to cryptocurrencies in Saxo Bank.”
Major financial institutions, stock markets and banks are recognizing the exponential increase in demand from professional and institutional investors. Through highly regulated vehicles such as ETNs, institutions are trying to address rapidly growing demand toward bitcoin and possibly, other cryptocurrencies such as Ethereum in the future.