BlackRock Enters European Crypto Market with Bitcoin ETP

BlackRock, the world’s largest asset manager, is preparing to launch a Bitcoin-linked exchange-traded product (ETP) in Europe. The fund, expected to be based in Switzerland, could begin marketing as early as this month, according to a Bloomberg report.

Here’s what you should know.

Why BlackRock Sees Bitcoin ETPs as a Smart Investment

“Being able to gain Bitcoin exposure via the ETP wrapper has proven to be a compelling combination for investors,” wrote Samara Cohen and Jay Jacobs, BlackRock’s chief investment officer of ETFs and index investments, and US head of thematic and active ETFs, in a blog post last month.

BlackRock is a leader in ETFs, managing over $4.4 trillion in such products. This new fund marks its first crypto-linked ETP outside North America. At the World Economic Forum in Davos, CEO Larry Fink spoke about Bitcoin’s potential as a hedge against currency devaluation, highlighting the firm’s confidence in the digital asset.

U.S. Bitcoin ETFs Drive Global Crypto Adoption

The launch of Bitcoin ETFs in the U.S. last year fueled a surge in demand, attracting $116 billion across 12 funds. BlackRock’s iShares Bitcoin Trust (IBIT) became the largest, setting a record as the best-performing debut ETF in history.

Institutional interest in crypto is expected to grow further, especially with increasing political support. Former U.S. President Donald Trump has expressed a more favorable stance on crypto, and upcoming regulations could provide much-needed clarity. In Europe, new crypto rules also came into effect in December, adding to the momentum.

BlackRock Joins the Race

BlackRock’s move follows a growing trend of investment firms expanding into crypto-backed securities in Europe. Kraken recently obtained a license to offer derivatives, joining firms like Bitstamp and FTX EU. However, Europe’s crypto ETP market remains smaller than its U.S. counterpart, with a total value of $17.3 billion.

Competition is fierce, with over 160 ETPs tracking Bitcoin, Ether, and other tokens. Some providers have introduced fee waivers to attract investors, though certain products charge fees as high as 2.5%. A similar fee battle took place when crypto ETFs launched in the U.S. in early 2024.

Will BlackRock’s Fee Structure Make a Difference?

The fee structure for BlackRock’s new ETP is still unknown, but it could be a key factor in its success. Senior Bloomberg analyst Eric Balchunas pointed out that cost efficiency is critical, especially since U.S. Bitcoin ETFs dominate the global market, holding 91% of total assets.

As BlackRock steps into Europe’s crypto ETP space, investors will be watching closely to see whether it can replicate its U.S. success or reshape the market with its new offering.