6 months ago
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Galaxy Digital, the digital asset financial services firm led by Michael Novogratz, is set to introduce crypto exchange-traded products (ETPs) in Europe “in a matter of weeks,” according to Leon Marshall, CEO of the company’s European operations.
The announcement comes nearly a year after Galaxy Digital partnered with asset manager DWS to develop products aimed at providing European investors with access to digital asset investments through traditional brokerage accounts.
DWS Group, formerly known as Deutsche Asset Management, is a German asset management company operating as a subsidiary of Deutsche Bank. Founded in 1956, DWS has a significant presence in the global financial market, managing assets worth €859 billion (note: data updated as of June 2023).
Speaking at the Blockworks’ Digital Asset Summit 2024 in London, Marshall confirmed the imminent launch of the new ETPs.
“We partnered with DWS and will, in a matter of weeks, be launching new ETPs in Europe,” Marshall said.
The collaboration seeks to bridge the crypto industry and mainstream financial markets. In addition to its European ventures, Galaxy Digital has also made strides in the U.S. market, partnering with Invesco to list a spot bitcoin ETF (BTCO) in January, one of the nine such products listed at the time. In December 2023, Galaxy Digital also announced plans to launch a stablecoin through its concurrent partnership with DWS.
What are ETPs?
Exchange-traded products (ETPs) are investment vehicles that track the performance of underlying assets and trade on exchanges like stocks. ETPs offer investors exposure to various asset classes, including commodities, currencies, and now, cryptocurrencies. In a previous piece for Crypto Briefing’s crypto education series, we discuss extensively the differences between ETNs and ETFs, which can be included in the umbrella term.
Crypto ETPs, such as Bitcoin and Ether ETPs, allow investors to gain exposure to digital assets through regulated financial instruments without directly owning the underlying cryptocurrencies. These products come in two main forms: futures-based ETPs and spot ETPs.
Futures-based crypto ETPs invest in cryptocurrency futures contracts, which are agreements to buy or sell a specific amount of the underlying digital asset at a predetermined price on a future date. These ETPs provide indirect exposure to cryptocurrencies and are subject to the risks associated with futures trading, such as contango and backwardation.
On the other hand, spot crypto ETPs invest directly in the underlying cryptocurrencies, such as Bitcoin or Ether. These products aim to track the price of digital assets and provide investors with a more direct exposure to the cryptocurrency market.
Impact on crypto markets
The introduction of crypto ETPs has made it easier for institutional and retail investors to participate in the digital asset market through traditional investment channels. By investing in crypto ETPs, investors can potentially benefit from the growth of cryptocurrencies without the need to manage the complex technical aspects of holding and securing digital assets directly.
However, it is essential to note that investing in crypto products such as these carries risks, including market volatility, regulatory uncertainties, and the potential for tracking errors between the ETP’s price and the underlying cryptocurrency’s price. As with any investment, investors should thoroughly research and understand the risks involved before investing in crypto ETPs.
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