that ETC Group was the first company to bring an exchange-traded Bitcoin product to the German exchange XETRA, the largest ETF trading venue in Europe, in June 2020. Since then, the company has steadily expanded its range of ETCs and, as a German-based issuer, is the leading provider of crypto securities with over USD 2.2 billion in assets under management (AUM) during peak periods.
When developing the products, which above all represent a solution for institutional investors, we concentrated on the highest level of quality and investor protection.
Maximilian Monteleone, co-founder and CMO of ETC Group
In this way, ETC Group is helping to make the cryptocurrency asset class accessible to a wider range of private and institutional investors. They can now invest through the same traditional financial markets that they use for their stock, ETF and mutual fund portfolios. This brings with it a number of advantages.
Because while security and regulatory standards for crypto exchanges are immature, traditional exchanges offer transparent fees while ensuring safe management of digital assets. So users don’t have to worry about hacks, scammers or the operation of a wallet and can invest in their favorite cryptocurrencies or baskets or indices.
But what exactly is the difference between ETCs, ETFs and ETPs?
ETCs and ETFs belong to the same family of financial products: Exchange Traded Products (ETPs). Structurally, crypto ETCs are similar to exchange-traded commodities. However, instead of being backed by a specific amount of the commodity, each crypto-ETC is backed by cryptocurrencies.
Both products are subject to the same default risk for the publisher. This means that assets are not at risk in the event of the issuer’s bankruptcy thanks to an independent receiver. In addition, both products are eternal in their term and are traded on the stock exchange in the same way. In this way, the products offer a 1:1 exposure to an underlying asset or index, while providing safe custody and investor protection.
So the main common characteristics of ETFs and ETCs are:
- They are shares.
- They are listed on regulated exchanges.
- They can be traded like stocks or shares through a regulated bank or trading account.
- They enable investors to participate in investment opportunities with little effort by passively tracking the price or underlying of an index, commodity or company stock.
ETFs and ETCs can be listed anywhere from the German to the New York Stock Exchange and, in the case of certain gold ETCs or the ETC group’s crypto ETCs, are tax-free for German investors after a one-year holding period. Bitcoin ETCs will be referred to as ETFs in other markets (such as Canada). The difference, however, is that European financial regulation provides a framework based on minimum diversification criteria. This prohibits European exchange-traded funds from investing in individual asset benchmarks or in individual physical underlyings.
ETC Group offers other innovative products, such as a savings plan and so-called theme ETFs
Exchange-traded index funds, called ETFs, allow investors to gain broad exposure to a market sector without buying a large number of different stocks or shares. For example, ETC Group offers metaverse or blockchain ETFs. Through these you invest in the most promising companies in the emerging growth market sectors without worrying about your portfolio management or custody. An example of an index is the S&P 500, which includes the shares of the 500 largest publicly traded US companies.
Another innovative product from the ETC Group is Crypto savings plan. With this, you don’t have to worry about the perfect time to trade, because the same amounts are invested regularly. In this context, ETC Group entered into a partnership with Comdirect, a brand and online broker for Commerzbank AG. Since the beginning of the year, this has expanded its savings plan to include cryptocurrencies with products from the ETC Group.
Whether single asset ETCs or index ETFs, ETC Group makes it easy to access crypto and digital assets on regulated exchanges. You can simply search for the ISIN or WKN at your bank or stockbroker and use it to buy crypto ETCs on Bitcoin, Ethereum and Co. on the stock exchange and add them to your existing portfolio. Like all other securities, the shares are safely stored in our own depository.
Get started today? Visit the official ETC Group website for more information.
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