BlackRock Brings First Bitcoin Product into European Markets

BlackRock is helping by legitimizing the asset class and opening more doors for institutional and retail participation with its first launch in Europe.

BlackRock, the world’s largest asset manager, has launched its first Bitcoin product in Europe. Industry insiders predict that this will help legitimize cryptocurrencies in mainstream finance.

BlackRock is one of the first institutional investors to offer exchange-traded products in the United States that track the spot price of Bitcoin after the initial approval from the Securities and Exchange Commission (SEC) in January 2024.

According to BlackRock’s product page, it has partnered with Coinbase as custodian and Bank of New York as the administrator for the latest product.

Meryem Habibi, chief revenue officer of London-based cryptocurrency trading platform Bitpace, stated that this is a historic development for cryptocurrencies, showing confidence in Bitcoin for mainstream investing.

She added that BlackRock is helping by legitimizing the asset class and opening more doors for institutional and retail participation with its first launch in Europe.

BlackRock’s product is called ‘iShares Bitcoin ETP’. Investors can buy or sell Bitcoin using ETPs (exchange-traded products) without directly owning the cryptocurrency. They are traded on stock exchanges and follow the price of Bitcoin. BlackRock’s product page says the iShares Bitcoin ETP started trading on Xetra, Euronext Amsterdam, and Euronext Paris on March 25.  

The launch comes after the success of its iShares Bitcoin Trust exchange-traded fund (ETF), which leads the US market and manages $50.7 billion of assets or around 2.73% of the total Bitcoin (BTC) supply.

Anthony Yeung, Coincover’s chief commercial officer (CCO), stated that ETPs give institutional investors access to the cryptocurrency without exposing them to the risks of native investing.

This type of investment is gaining more popularity globally. In the United States, investors have already invested $50 billion in BlackRock’s Bitcoin ETPs.

Yeung states that if BlackRock becomes a success in the US, it will create significant inflows of institutional capital in Europe, boosting the price of Bitcoin and promoting the acceptance of cryptocurrencies as an essential asset in a balanced portfolio.

They launched the product with a 10-basis point temporary fee reduction, which decreases the expense ratio to 0.15% through the end of 2025. While the waiver is in effect, BlackRock’s offering is significantly less expensive than the CoinShares Physical bitcoin ETP, which is currently the most popular crypto ETP in Europe and charges 0.25%.

Stephen Wundke, director of strategy and revenue at crypto investment firm Algoz, claimed that BlackRock’s strategy for fee structure was to keep their competitors away from the market. Wundke highlighted that the competition benefits digital currencies since they need to provide the best product to win investors.

Europe is still catching up despite adopting ETPs much slower than the US. That is partly because of the European Union (EU) Markets in Crypto Assets (MiCA) regulation, which came into effect late last year. The law provides a clear and well-organized framework for launching new products.

Last year, Europe managed $12 billion in ETP assets, which is still insignificant compared to the United States (which has $57 billion). It is still a tenfold increase from 2020 levels.

Europe has 135 ETPs as investment options, far more than the US, which has 35.

According to Track Insight, the US-based CoinShares, the largest ETP issuers in Europe last year were Switzerland’s 21Shares and London-based ETC Group.

Fintech specialist James Burnie of the British law firm Gunnercooke said that BlackRock’s entry into Europe’s ETP market is an added boost to the industry. It makes conventional financing much easier to handle cryptocurrency assets.

He continued that such a move is a double-edged sword since crypto markets have already become a mainstay in finance. So, it will have less impact on the market. However, scrutiny will increase for traditional players who are not present in the industry.

Meryem Habibi agreed with Burnie regarding the maturity of the industry. She argues that BlackRock’s action speaks to a wider trend of blending digital assets with traditional finance.

According to her, crypto is starting to resemble traditional finance.