Deutsche Borse Exchange aims to launch new exchange product on the basis of Bitcoin
London financial firm ETC Group reported it will выставлять pose Bitcoin as an exchange product with decentralized clearing (ETP) on e-trading market in Germany.
Bitcoin-backed security will be sold in Germany
The company has announced issuing a new commodity known as an exchange crypto Bitcoin backed security (BTCE).
This is a security backed by Bitcoins, and it would be listed and sold on the German market Xetra at Deutsche Borse. ETP is a financial instrument which value depends on the basic security (for example, currencies, bonds and stocks) and is traded at stock markets.
This is an important news that makes. BTCE the first crypto asset with centralized clearing registered at one of the largest European exchanges.
Centralized clearing is an instrument used on the European market of derivatives for increasing stability. This is possible because the financial entity takes the default risks and the credit risk of counterparty. Security marker is also supported by BTC, and each stock provides owner with a right to get certain amount in crypto.
According to the report, physical BTC products will be stored in a cold wallet that does not have internet connection and is managed by the Californian BitGo custodian.
ETC Group CEO Bradley Duke have recently announced that BTCE is working at wider implementation of the largest world cryptocurrency - BTC.
He said, “investors get profit from trading and storing BTC via adjusted security and they can also buy the asset back if they want”.
Bradley noted that when investors trade at regulated markets they can also buy and sell BTCE in the same way as they trade traditional stocks under protection of financial regulators.
The report also indicates that BTCE is a hybrid ETP (commodity) which has the same functions as ETF (exchange fund). But, according to the European fund schedule, BTCE represents a financial instrument tied to one asset, and this is why it cannot be the ETF.
Passive investment opportunity
Bitcoin-backed security will cost a little more expensive than traditional ETF with 2% of income proportions in comparison with 0.5-0.7% taken by most ETF. The British financial firm ETC Group wrote, “It’s a challenging task to bring the product to regulated markets, and this reflects in the reward”.
This new security backed by crypto will be listed on the German stock exchange at the end of the month as it has already got the approval of the German regulator BaFin. In March, 2020 it officially called cryptocurrencies financial instruments.
The new security system based on Bitcoins will spread through the e-trading platform Xetra Deutsche Borse that unites other financial products such as medical cannabis ETF cloud computer EFT.
Nevertheless, ETC Group has announced it is planning its further expansion to Austria, Britain and Italy considering that users of these countries will be able to trade and hold BTCE stocks.
Blocknox has provided crypto bonding services to institutional clients
Since the moment of the introduction of new crypto regulation in Germany, several financial institutions within the country have been preparing for providing crypto storage services. The law concerning amendments to the fourth EU regulation for anti-money laundering came into force on 1st January, 2020.
The law required that financial entities would be able to provide crypto storage services only after getting the permission of BaFin. Boerse Stuttgart is one of the entities that have asked for such permission. This is the second largest stock exchange that got the BaFin разрешение for the services of crypto storage. The new crypto regulation accepted in German has attracted new institutional investors.