BlackRock Prepares Bitcoin ETP for Europe, Eyeing Swiss Domicile for Regulatory Flexibility
Following the success of its Bitcoin Spot ETF in the United States, BlackRock is gearing up to launch a similar product in Europe. According to Bloomberg, the asset management giant is working on a Bitcoin exchange-traded product (ETP) that will likely be domiciled in Switzerland. This expansion reflects BlackRock’s desire to strengthen its position in a market that falls significantly short of the size of the US Bitcoin ETF market.
With approximately $57 billion in assets under management for its iShares Bitcoin Trust ETF (IBIT), BlackRock dominates the sector in the United States. In comparison, the European crypto ETP market represents only $17.3 billion, despite the presence of over 160 products tracking the prices of Bitcoin, Ethereum, and other cryptocurrencies.
A Strategic Expansion following the Success of the US Bitcoin ETF
BlackRock’s approach in Canada, where it "wrapped" its US-based IBIT ETF in a local ETP, may not be feasible in Europe. Bloomberg ETF analyst James Seyffart believes this approach is unlikely to be allowed in the European Union, potentially forcing BlackRock to offer an independent product. The choice of Switzerland as the jurisdiction for the Bitcoin ETP is indicative of the country’s more flexible regulatory framework for crypto-related financial products. It remains to be seen whether BlackRock will adopt a similar model to its previous ETFs or if it will need to innovate to comply with European requirements.
Bitcoin ETF in Europe: The Battle of Fees and Liquidity
One key element of this expansion will be the cost of the product. In the United States, BlackRock charges 25 basis points (0.25%), while in Canada, the pricing is slightly higher at 32 basis points (0.32%). However, competition in Europe is already fierce, with some providers like Valour offering zero-cost products. BlackRock’s success will therefore depend on its ability to offer a competitive advantage in terms of cost and liquidity. If the company can replicate its US model, where Bitcoin ETFs account for 91% of global crypto ETF assets, it could quickly establish itself in a still fragmented market.
Cautious European Adoption
While the US market has shown a fierce appetite for Bitcoin ETFs, Europe is taking a more measured approach. According to Seyffart, European investors are less inclined to take risks than their American or Asian counterparts. Nevertheless, the presence of BlackRock, a leading player, could help legitimize and energize institutional adoption of Bitcoin products in Europe. BlackRock’s entry into the European Bitcoin ETP market marks a strategic turning point, but the challenge will be to find an attractive positioning amidst an already established competition. It remains to be seen whether the company will be able to transpose its highly successful model into a more regulated and conservative environment.