A Swiss investment certificate that tracks the price of bitcoin is gaining popularity with investors. The Vontobel bitcoin certificate is one of the most-traded structured products on Switzerland’s largest stock exchange, according to a local publication.
Strong Demand for Bitcoin Tracker Certificates
The Vontobel bitcoin tracker certificate was launched in 2016 and is listed on Switzerland’s largest stock exchange, the Six Swiss Exchange. Since its launch, the firm saw “considerable demand” for the tracker certificate and subsequently raised its issue size a couple of times. On Thursday, a Swiss/German-language daily newspaper published by the NZZ Media Group, the Neue Zürcher Zeitung, reported:
The certificate is a success: On many days it is the most traded structured product on the Swiss stock exchange. The initially small issue volume of the certificate with a term of two years was quickly increased to CHF 20 million and now increased to CHF 40 million.
The product trades under the symbol ZXBTUV with bitcoin priced in USD as the underlying asset. The certificate has a two-year term. The first day of trading was on July 15, 2016, and the last day of trading will be on July 16, 2018. “Between those dates, investors will be able to trade the Vontobel certificate on the secondary market, i.e. buying or selling at the applicable bid/offer prices,” the firm explained. Roger Studer, Head of Vontobel Investment Banking, said this bitcoin certificate “will for the first time give investors a simple and transparent means of investing in bitcoins on the Six Swiss Exchange.” Redemption is in cash, equal to the price of bitcoin at the certificate’s maturity.
Attraction to Vontobel Bitcoin Tracker Certificates
Established in 1924, Swiss private bank Vontobel specializes in wealth and asset management for private clients and institutional investors. With 21 international locations, the firm also offers investment and private banking services. At the end of 2016, it held CHF 195 billion of client assets.
Citing the complexity of acquiring digital currencies, the Neue Zürcher Zeitung wrote that “there are a lot of questions to ask the potential investor such as: what crypto you should buy, should you do it directly on a stock exchange or with a broker, do you need a web wallet for the coins, and what to do with the elliptical code.”
These questions are why bitcoin tracker certificates and similar standardized investment products are welcomed by Swiss investors, the publication quoted an asset manager saying. Investors in Switzerland feel that trading bitcoins with a Swiss bank carries a significantly smaller risk, he continued, adding that “one does not have to invest on a bitcoin platform, which many asset managers consider unsafe.”
Meanwhile, two other bitcoin tracker certificates are also gaining popularity globally. Bitcoin Tracker One and Bitcoin Tracker Eur issued by XBT Provider recently announced having achieved $100 million in assets under management, due to “rapidly escalating” demand from investors. This announcement followed the two products’ listing by Britain’s largest broker, Hargreaves Lansdown.
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