Sweden, Canada lead in crypto ETPs as proposal stack in the US grows

Though the US currently hosts only four out of the top 25 crypto exchange-traded products (ETPs), successful attempts by firms to gain approval for over two dozen such offerings from the Securities and Exchange Commission could rapidly change that.

The largest crypto ETPs by far are Sweden-based XBT Provider’s Bitcoin Tracker One (COINXBT) and Ethereum Tracker One (COINETH), according to a Wednesday report by CoinGecko. The data is as of Sept. 11.

Both are exchange-traded notes (ETNs), which are debt instruments typically collateralized by the underlying exposure.

COINXBT and COINETH have roughly $4.4 billion and $2.6 billion in assets, respectively — well ahead of third-place Hashdex Nasdaq Crypto Index fund in Brazil, which has nearly $1.1 billion in assets under management.

The ProShares Bitcoin Strategy ETF (BITO) — a fund holding bitcoin futures contracts that launched in the US in October 2021 — has $915 million, while Canada’s Purpose Bitcoin ETF sits in fifth at $819 million.

Canada is home to six of the top 25 largest ETPs in the world, the CoinGecko data shows.

The crypto ETP rankings include nine ETFs, five ETNs, eight exchange-traded commodities (ETCs), two closed-end funds, and one investment trust.

However, if the SEC adjusts its stance, these top products could shift rapidly. Over the past decade, the US agency has turned down dozens of attempts from issuers aiming to introduce ETFs that would hold bitcoin directly.

Bloomberg Intelligence analyst James Seyffart said in July that a US spot bitcoin ETF “could be the largest, if not one of the largest, launches in history.”

Matt Hougan, chief investment officer of Bitwise, said during a webinar last month that such a fund could attract $55 billion in net flows in its first five years on the market.

Grayscale Investments’ court win against the SEC last month has led various industry watchers to believe spot bitcoin ETF approvals are now more likely in the next year or so.

Judges in the DC Circuit Court of Appeals ruled that the SEC denying the conversion of the Grayscale Bitcoin Trust (GBTC) to an ETF — but allowing bitcoin futures ETFs to launch — was “arbitrary and capricious.”

The SEC is not forced to approve the product, but it cannot block GBTC’s conversion under the same reasoning.

GBTC currently has $16.2 billion in assets under management. When asked about competition the fund would face if US spot bitcoin ETFs are ultimately greenlit, Grayscale Chief Legal Officer Craig Salm said GBTC is the only ”actual fund today with [assets under management], trading volume and investors.”

List of US live filings continues to grow

The first-time proposal by asset management giant BlackRock in June to launch a spot bitcoin ETF spurred other firms to reignite their previous efforts.

Franklin Templeton became the latest to file for a spot bitcoin ETF on Tuesday.

Fund issuers have now sought to bring crypto ETFs to market that go beyond bitcoin, as more than a dozen planned ETFs that would hold ether futures contracts are now in front of the SEC.

Planned spot ether ETFs entered the fold last week, with Ark Invest and 21Shares collaborating on one, and VanEck renewing its bid to launch another.

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Most recently, Hashdex on Tuesday shared plans to launch an Ethereum ETF that would hold both spot ether and ether futures contracts.

A spokesperson for the company declined to comment.

The Hashdex filing came after the company said in a filing last month that it intends to change its Bitcoin Futures ETF (DEFI) — launched in September 2022 — to a fund that also holds bitcoin directly.

Both of Hashdex’s proposals note that their net asset values would be calculated using spot bitcoin and ether prices derived from the prices of the assets’ respective futures traded on the Chicago Mercantile Exchange (CME) “to avoid any exposure to potential manipulation from unregulated exchanges.”

While ether futures ETFs could launch as soon as next month, the SEC has 240 days to rule on the proposed spot bitcoin and ether funds, bringing those deadlines to 2024.

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