Invesco Launches Physically Backed Bitcoin ETP

Investment management firm Invesco has unveiled a new physical backed bitcoin ETP, tracking CoinShares Bitcoin Hourly Reference Rate index. The custodian for the assets is Zodia Custody, a firm that registered with the U.K.’s FCA.

American investment management company Invesco has revealed a new Exchange-traded Product (ETP) physically backed by bitcoin. The Invesco Physical Bitcoin ETP has a fixed 0.99% annual fee.

The BTC will be held by Zodia Custody, a U.K.-based custodian registered with the U.K.’s Financial Conduct Authority (FCA). CoinShares, one of Europe’s largest digital asset firms, will sponsor the ETP and will act as the execution agent.

This is one of the earliest BTC ETPs in the U.K. and comes as something of a surprise, as the country’s officials are quite hesitant about the crypto market.

Invesco also launched this product as an Exchange-traded Note (ETN) on the digital stock exchange Xetra, which is run by German stock market operator Deutsche Boerse. ETNs are a type of ETP, and this product trades under the symbol of BTIC and follows the CoinShares Bitcoin Hourly Reference Rate index. This has also been registered with German financial authorities.

Speaking about the draw of physical bitcoin backing, Invesco Head of ETFs and Indexed Strategies Gary Buxton said,

Physical bitcoin is a more observable marketplace. One of our concerns was the depth of synthetic liquidity as well as what that may do to valuations over time, and that is something we were not wholly comfortable with.

Invesco is also working on launching a bitcoin ETF in the United States, which is arguably its biggest move yet, is partnering with Galaxy Digital to do so. Surprisingly, India’s securities regulator also approved an Invesco crypto ETF, despite the regulatory uncertainty in the country.

More bitcoin products emerging

It has become evident in 2021 that regulators are willing to approve crypto products if they meet certain requirements. Investor protection has been the biggest concern and is the reason why the United States Securities and Exchange Commission (SEC) has been hesitant to approve a direct bitcoin ETF.

The U.S. has seen a few bitcoin futures ETFs be approved, from ProShares and VanEck. The former especially performed well, trading 24 million shares on its debut. SEC Chair Gary Gensler has shown acceptance for BTC futures ETF — but spot ETFs are another matter.

This global trend of some crypto products being approved is growing, with Europe especially seeing some new additions. As regulators lay out guidelines and crypto companies adjust to it; it is likely that the market will see many more spot ETFs. This will help boost inflow, which is already seeing record numbers for bitcoin.