Eurex Launches Bitcoin ETN Futures
Posted by Colin Lambert. Last updated: August 24, 2021
Deutsche Börse’s Eurex has launched what it says is the first regulated market in Bitcoin-related derivatives with the unveiling of Bitcoin ETN (exchange traded notes) futures. The exchange group has also expanded its crypto offering with ETNs on Ethereum, Bitcoin Cash and Litecoin.
The new futures will be launched on 13 September and based upon the BTCetc Bitcoin Exchange Traded Crypto, which is listed on the Frankfurt Stock Exchange and is, Eurex says, among the most heavily traded ETF/ETN contracts on Xetra since its start in June 2020.
The Bitcoin ETN was equivalent to 1/1000th of a Bitcoin at launch and is fully backed by and redeemable in Bitcoin. The new futures contract will be traded in euro and physically delivered in Bitcoin ETNs. Eurex says this set-up allows investors to track the price development of Bitcoins in a fully regulated on-exchange environment and based on a transparent price discovery of the underlying ETN. Both the underlying ETN, as well as the futures, trade, clear and settle on Deutsche Börse Group’s infrastructure.
Bitcoin ETN futures are centrally cleared like any other derivatives traded on Eurex, whicgh means the standard clearing, netting, and risk management processes thereby come into effect, mitigating counterparty risk and reducing operational costs for market participants.
“There is significant demand from institutional investors to gain Bitcoin exposure in a secure and regulated environment,” says Randolf Roth, member of the Eurex executive board. “The new Bitcoin ETN futures enable investors to trade and hedge Bitcoin within Eurex’s proven trading and clearing infrastructure without the need to turn to unregulated crypto venues or set up a separate infrastructure, such as a crypto wallet. It is the logical extension of the ETN that already trades very successfully on Xetra.”