The world's first publicly traded instrument offering direct exposure to Bitcoin prices on a regulated venue may end up coming from Sweden, to be traded on the Stockholm Stock Exchange.
The instrument is an exchange traded note (ETN) called Bitcoin Tracker One. It is administered by a Sweden-based company called XBT Provider, a name previously unfamiliar to the industry. The company says it is an incorporated entity in Sweden, a subsidiary of KnC Group AB, the parent of well-known Bitcoin mining company KnCMiner.
Alexander Marsh, XBT Provider's CEO, said:
"We are proud to offer the world's first "Bitcoin tracker" to be traded on a regulated exchange. By enabling this easy and secure way to invest in Bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money."
Bitcoin Tracker One is scheduled for official launch on May 18. It will be listed in Swedish krona (SEK), but its value will track the traded price of bitcoin versus the dollar (BTC/USD), which the company noted is the most liquid pairing for bitcoin. The instrument is unleveraged and carries a 2.5% annual management fee. Units are priced at 10 SEK and mature in 2019. Its prospectus, approved by Sweden's Finansinspektionen (FSA), can be found here.
Exchange traded notes (ETNs) differ from the more commonly known exchange traded funds (ETFs) in that they are in fact debt securities, constraining their value to the creditworthiness of the institution behind them. ETN's do not own or carry the assets they track.
An XBT Provider representative told Finance Magnates that the company plans on launching several investment vehicles in the future, including an ETF denominated in USD. The company deemed an ETN a more worthwhile instrument to start with, as it does not entail the physical possession of bitcoins by the note administrator. The costs of administering an ETF product are higher and the process takes longer. It is hoped that the initial product will serve as a springboard to expedite the process of bringing new offerings to market.
The Stockholm Stock Exchange is part of the global NASDAQ OMX group, and is also known as NASDAQ OMX Nordic. The stock exchange was acquired by futures exchange OM in 1998, then merged with Helsinki exchange in 2003, forming OMX. The 2008 merger with NASDAQ formed what is today the NASDAQ OMX group.
First to the Finish?
Depending on when Barry Silbert's Bitcoin Investment Trust (BIT) officially launches for trade, XBT Provider's may be the world's first to make it to the finish line. Two months ago, BIT was officially approved for listing on the U.S. OTC markets, the final date for launch still pending.
XBT's Provider's security will also be listed on a full-fledged regulated venue. BIT was only able to gain approval in such a relatively short period because of the OTC's less arduous approval process. There are plans for the BIT fund to eventually adhere to the more stringent Alternative Reporting Standards.
Both funds are arriving at the finish line well ahead of the Winklevoss Bitcoin Trust, which seeks to bring a full-fledged ETF for public listing based on bitcoin prices. The ETF has been pending approval for nearly two years.
Hope has been expressed that bringing bitcoin trading to regulated venues will help instill investor confidence and perhaps stabilize its price behavior. However, the cryptocurrency's Volatility is most likely a symptom of the unknown science of determining its fundamental underlying value.
