Bitcoin is slowly starting to inch its way into traditional markets and one way it's doing so is through ETFs, we've already seen futures and mining ETFs launched in the US, while Canada and Brazil have spot ETFs.
There are still applications in the works by firms like Skybridge to launch a spot ETF, but the SEC isn't too happy about it yet. While US investors wait other countries are moving forward with their own versions.
In fact, Bulgarians can now invest in bitcoin through their country’s stock market. The Bulgarian Stock Exchange announced this week that it will launch eight ETNs based on two digital currencies, bitcoin, and Ethereum.
Not the first and surely not the last
Bulgarian Stock Exchange or BSE) started trading digital asset instruments tracking the price rates of bitcoin (BTC) and Ethereum (ETH) with their spot price.
“Investors looking for suitable innovative crypto products may now freely trade in eight crypto exchange-traded notes (ETNs),” according to an announcement published this past Thursday.
What is an ETN?
An exchange-traded note or ETN is a senior, unsecured, unsubordinated debt security issued by an underwriting bank. The bank takes custody of the underlying asset while the issue a derivate to represent the asset and use that as a trading tool As is the case with other debt securities, ETNs have a maturity date and are backed only by the credit of the issuer, which means it carries third party risk.
The ETNs do allow investors to put money into digital assets without the need to create an account with an exchange or set up wallets using cryptographic keys. This makes it easier for normies to invest and get exposure to bitcoin but also makes them complacent and never bother to learn how to use bitcoin.
While investors will have access to regulation-compliant digital asset instruments it also exposes you to third-party risk since you own a bitcoin claim and not real bitcoin.
ETNs expanding across Europe
The BSE launch of a Bitcoin ETF follows in the footsteps of other European exchanges such as Deutsche Börse and Euronext, which introduced these instruments two years earlier.
The trading of digital asset-based ETNs is in continuation of BSE’s long-term partnership with Deutsche Börse. The german-based securities trading marketplace and market maker Tradegate AG will be handling the ETN issuance as well as the liquidity of the crypto instruments.
The 8 digital asset ETNs will be available on The Bulgarian stock exchange and can be traded in euros and only during the regular trading hours.
Trading securities not only as availability restrictions but using traditional rails also means you are fully KYC'd and you can't take custody of the underlying asset, which isn't great for privacy.
Since you also only own a claim, you have no protection against law changes nor do you have a hope in hell if bitcoin is seized, something that doesn't sit well with me in any economic climate.
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