The competition in Bitcoin exchange-traded products (ETPs) has intensified in Europe, following the recent approval of Bitcoin exchange-traded funds (ETFs) by the United States Securities and Exchange Commission (SEC). This development has led to a notable fee war among asset managers in Europe.
In response to the SEC’s approval of Bitcoin ETFs in the U.S., European asset managers have significantly reduced their fees. Invesco and WisdomTree, two prominent asset managers, have cut fees on their European-listed ETPs by over 60%. The Invesco Physical Bitcoin ETP’s fees have been reduced from 0.99% to 0.39%, and the WisdomTree Physical Bitcoin ETP’s fees have dropped from 0.95% to 0.35%.
In Europe, digital asset exchange-traded products are typically structured as exchange-traded notes (ETNs) rather than funds. This distinction is crucial as ETN investors own a debt security, while ETF shareholders own a portion of the fund’s underlying assets.
The fee reduction in Europe is largely attributed to the increased competition following the approval of multiple Bitcoin ETFs in the U.S. Previously, U.S.-based investors relied on Canadian and European ETPs for their Bitcoin investments. However, with the U.S. now hosting its own ETFs, the demand for European ETPs among American investors has decreased significantly.
Gary Buxton, head of ETFs for Europe at Invesco, shared insights with the Financial Times. He noted that the introduction of multiple ETFs in the U.S. market has led to a reevaluation of fees, seeking a new balance between supply and demand. This has resulted in lower prices for ETPs in Europe compared to their American counterparts.
The U.S.-based Bitcoin ETFs offer several advantages over European ETPs, including higher liquidity and availability on a single exchange platform. This makes them more appealing to European investors. Since their launch, these U.S. ETFs have seen substantial trading volumes, maintaining high activity levels even weeks after their introduction.
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