Europe’s biggest exchange-traded funds [ETF] trader that has handled close to $700 billion in ETF trading in the past year, has now started market making on Ethereum and Bitcoin Exchange traded notes [ETNs]. Amsterdam-based Flow Traders NV was the first to publicly reveal their trade in crypto ETNs.
An ETN and an ETF are identical in nature with the main difference between the two being that while ETFs are investments in funds that track asset price movement, ETNs are similar to investing in bonds.
Essentially, ETNs aim to lower slippage while increasing liquidity. On this account, Dennis Dijkstra, the Co-Chief Executive Officer, believes that this approach can be largely beneficial to the company. As of yet, Dijkstra has not addressed whether or not Bitcoin or Ethereum will be utilized by Flow Traders to hedge each trade.
Flow Traders continues to trade in the Bitcoin and Ethereum ETNs [COINXBT:SS and CORINTH:SS]. They were launched by XBT Providers, listed in Sweden with an asset management portfolio of over $1 billion, in the years 2015 and 2017.
Addressing this recent development, Dijkstra said:
“People underestimate crypto. It’s big, and it is about to be regulated very soon. The market participants are much more professional than people think. Institutional investors are interested- we know they are because we get requests.”
While Dijkstra seems confident about the move, the regulators of the country seem less than optimistic about it. Niece Torensma, a spokeswoman for the Dutch Authority of the Financial Markets [AFM], said:
“We discourage activities in cryptos both by consumers and professional license holders. By virtue of its newness and the anonymity it potentially offers, it is very prone to abuse. Given its inability to serve the promised purpose as a currency, we don’t regard it to be an asset class.”