According to Eric Balchunas, a senior ETF Analyst for Bloomberg, Sweden’s Bitcoin exchange-traded fund (ETN) is bigger than around 80 percent of US exchange-traded funds (ETFs).
— Eric Balchunas (@EricBalchunas) November 30, 2017
Why is the popularity of Swedish Bitcoin ETN rising?
XBT Provider, the Bitcoin ETN listed on Nordic Nasdaq, a major Swedish stock exchange, is currently one of the three methods of investing in Bitcoin through a strictly regulated market, apart from Grayscale Investment’s Bitcoin Investment Fund (GBTC) and LedgerX’s US Commodities and Futures Trading Commission (CFTC)-approved Bitcoin derivatives, options and futures exchange.
Earlier this year, billionaire investor and the owner of NBA’s Dallas Mavericks Mark Cuban revealed at the Vanity Fair New Establishment Summit in Los Angeles that he officially invested in Bitcoin through XBT Provider in Sweden.
“It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some through an ETN based on a Swedish exchange,” said Cuban.
In September, immediately after JPMorgan CEO Jamie Dimon offered baseless condemnation on Bitcoin, it was revealed that JPMorgan Securities traded Bitcoin on behalf of its clients through custodian accounts on the Nordic Nasdaq, using the XBT Provider Bitcoin ETN.
High profile investors such as Cuban and large-scale investment firms are restricted to invest through strictly regulated stock markets and investment platforms. Hence, while it is possible for Cuban and other major investors to purchase Bitcoin with personal savings on Bitcoin brokers and exchanges, with a large portfolio, it is difficult to invest directly in Bitcoin.
Expect volumes of regulated Bitcoin investment tools to rise
Several leading Bitcoin brokerages including the $1.6 bln company Coinbase introduced platforms targeted at institutional and retail investors. Coinbase Custody for instance, enables investors to allocate at least $10 mln into Bitcoin. As Coinbase CEO Brian Armstrong wrote:
“Coinbase Custody is only available to institutional investors with a minimum of $10 mln in deposits. Retail customers can utilize Coinbase.com as a custody solution.”
Armstrong added that Coinbase already stores billions of dollars worth of digital assets on behalf of the firm’s clients and retail traders.
“We already store billions of dollars worth of digital assets on behalf of our customers. We serve thousands of institutions via our GDAX product, the leading digital currency exchange in the US,” said Armstrong, adding that around $10 bln in institutional money is awaiting to be invested in Bitcoin. “By some estimates, there is $10 bln of institutional money waiting on the sidelines to invest in digital currency today.”
Upon the launch of Bitcoin futures exchanges by CBOE and CME, two of the largest options exchanges in the global finance market, the volume of regulated Bitcoin investment instruments such as ETNs on Nordic Nasdaq and GBTC will spike, as demand from the traditional finance market surges over time.