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Asset Manager WisdomTree launches Bitcoin-based exchange-traded product

One of the world's largest asset managers, WisdomTree, headquartered in New York, has listed its first Bitcoin Exchange Traded Product (ETP) on the SIX Swiss Stock Exchange. The company announced this in a press release published on December 3, 2019.

New York-based WisdomTree, one of the largest providers of Exchange Traded Funds (ETFs) in the United States, yesterday launched a new Bitcoin Exchange Traded Product (ETP) on the SIX Swiss Stock Exchange. This is the first product of the company that tracks Bitcoin and gives investors the ability to invest in cryptocurrency without having to manage their own wallet.

Such products theoretically open up bitcoin investment to mainstream traders, bypassing the need for individual private keys and reducing the likelihood of theft and cyber-attacks. According to the WisdomTree announcement, all Bitcoin funds that support the ETP are kept offline in the Cold Wallet.

Alexis Marinof, Head of Europe, WisdomTree:

We have been monitoring cryptocurrencies for some time and are excited to bring investors secure access to this developing asset class. We have seen enough to believe that digital assets, like Bitcoin, are not a passing trend and can play a role in portfolios. WisdomTree has a history of bringing innovative investment themes to a broad market through institutional-class products, allowing investors to take exposures in difficult-to-access asset classes - we see many parallels between the cryptocurrency space and commodities in this regard. The introduction of cryptocurrencies in an ETP structure will enable investors to find new ways to introduce digital assets into portfolios while still relying on the safety and security that they have come to expect from WisdomTree.

ETPs are slightly different from ETFs, which Bitcoin and other crypto lovers have undoubtedly become familiar with in recent years, as such proposed products have attracted attention. Put simply, ETFs are a kind of ETP, although ETFs are subject to different legal requirements and thus to greater regulatory control. However, both products offer the promise of a generous, institutional investment in the world of Bitcoin and other cryptocurrencies for which WisdomTree expects strong demand.

Rafi Aviav, Head of Product Development, Capital Markets and Technology at WisdomTree, adds:

Cryptocurrencies are potentially the next asset class to benefit from increased interest when they become accessible in an ETP structure. We have developed a solution which addresses the difficulties investors face in accessing digital assets and are bridging the gap between the underlying decentralised online blockchain technology and traditional investment structures. The ETP wrapper will add new dimensions to the cryptocurrency universe including institutional class custody solutions for investors, easier trading incorporated into standard brokerage and account maintenance procedures, more liquid and transparent trading and a broader array of more sophisticated market participants entering the arena for these products.

WisdomTree is the market leader in physical gold ETPs in Europe. In 2003, the company launched the world's first physically backed gold ETP2. Today's launch of the WisdomTree Bitcoin ETP continues this tradition of innovation, expressing the company's deep expertise in the field of physically secured ETPs.

Similar to physical gold ETPs, WisdomTree Bitcoin ETP investors are entitled to a certain amount of bitcoins. Investors can view their pro rata bitcoin entitlement as well as the total amount of covert bitcoins held on the WisdomTree website. To ensure the highest level of security, WisdomTree employs digital asset managers that manage high-security cold storages. These specialists use sophisticated physical and digital security procedures, as well as state-of-the-art technologies to securely generate keys, encrypt data, and create and verify digital signatures required to handle and preserve cryptocurrencies. WisdomTree uses this approach to address one of the key barriers currently hindering the introduction of cryptocurrency by investors.

At the moment, WisdomTree uses the cryptocurrency ETP only for professional investors. However, the company is confident that regulatory approval for this product will be available to broader audiences in the near future, thereby addressing the important regulatory barrier.

Jonathan Steinberg, CEO of WisdomTree, sums up:

WisdomTree has always been at the forefront of innovation and we see blockchain technology and digital currencies as being transformative for the asset management industry. Much like how the ETP structure has out-shined the antiquated mutual fund structure in significant ways, blockchain and cryptocurrencies have the potential to change how investors participate in financial markets, globally.

As the Swiss online bank Swissquote communicates in parallel, it will take over the custody of cryptocurrencies in Switzerland. The product is tradable in USD on the SIX (Symbol: BTCW) and is intended for professional investors. The cover is provided 1:1 by provisions and the product is fully covered by Bitcoin, which is held by Swissquote in Switzerland. Swissquote secures the underlying Bitcoin assets offline using secure cold storage technology. This opens up the opportunity for investors to invest in Bitcoin through a traditional financial product that ensures high security

WisdomTree currently manages more than $ 60 billion in assets globally, Reuters said. Financial instruments based on Bitcoin are becoming increasingly popular as demand among institutional investors continues to increase. However, there are still some obstacles that keep investors from investing in the market. This includes a secure storage option in the context of a certified custody solution or a corresponding hedging of the capital with warrants or a deposit insurance by the provider itself or external service providers.

Furthermore, the legal framework conditions are not sufficiently clarified in all, so that investors in some countries continue to face difficulties in the mere possession or subsequent taxation. It remains to be seen whether there will soon be a single regulatory framework in the EU and the United States.

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