With Bitcoin ETFs, CoinShares dreams of becoming the BlackRock of crypto

Already managing $4.5 billion in assets, CoinShares gains a foothold in United Statesparticularly on ETF spot Bitcoin. The leading European player in ETP could see himself as a “little BlackRock of the crypto “. Interview with Managing Director France.

A studious end to the year for the British CoinShares and its teams. The SEC’s decision on Bitcoin spot ETFs went very quickly,” says Benoît Pellevoizin, Managing Director of CoinShares France.

Benoît Pellevoizin – Managing Director, CoinShares France

We were almost certain that these ETFs would arrive. It may even be a little faster than we anticipated,” he admits.

Grayscale’s legal victory over the SEC was a decisive factor. It’s now a foregone conclusion, Bitcoin is validated by “the world’s largest asset managers. It’s a real institutionalization,” analyzes the CEO.

The financialization process extended to Bitcoin

CoinShares is no new convert. Indeed, the company with international ambitions created the first crypto ETP in 2015 in Europe.

CoinShares’ founders anticipated that the classic process of financializing an asset would be similar on Bitcoin, just as we had seen on gold, commodities or real estate.”

“Bitcoin, and digital assets more generally, are experiencing this moment of financialization,” judges Benoît Pellevoizin. And this movement has begun in Europe. CoinShares’ XBT Provider, with nearly $2 billion in assets under management, has been available on the Old Continent since 2015. ETF/ETP products in Europe total over $10 billion under management.

The launch of spot ETFs on Bitcoin in the United States nevertheless marks a turning point for finance. The US market accounts for 50% of global asset management. “We can imagine that many Americans will be exposed to Bitcoin via this type of product in the years to come,” foresees the CoinShares executive.

Can this dynamic in the USA influence the European market? There are significant differences between the two continents. European ETFs are multi-asset. So, in Europe, ETPs with a single underlying are ETCs (Exchange Traded Commodities), such as crypto-ETPs.

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Obstacles to crypto funds in France

The majority of ETPs in Europe are ETCs [Ndlr : exchange traded commodity]belonging to the same family as ETFs. They replicate the performance of the underlying asset, but most of them are physical,” explains Benoît Pellevoizin.

European investors therefore have access to comparable investment products, including crypto. However, Europe is not a homogeneous market. France is lagging behind in the retail sector, due to the obstacles put in the way by gatekeepers such as banks and brokers.

Retail accounts for around 95% of CoinShares customers. But these are mainly located in Germany, Sweden, Austria, the Netherlands and Switzerland.

In France, banks and brokers don’t allow you to invest via this type of product.”

In the United States, several brokers, including Vanguard, have already warned that they will not distribute spot ETFs on Bitcoin.

“That’s our problem in France. By comparison, in Germany, all brokers and banks offer our products,” says Benoît Pellevoizin, for whom exposure to crypto through ETPs is preferable. Moreover, the arrival of spot ETFs in the US should result in the democratization of exposure to digital assets.

Could the opening up of the US market lead to developments in Europe?

Even if finance is globalized, this type of product travels very badly. Bitcoin ETFs cannot be offered in Europe,” warns the director of CoinShares France.

Halving Bitcoin and demand: 2 growth levers

In Hong Kong, more than a dozen asset managers are preparing Bitcoin and Ethereum ETFs.

The idea is spreading. I’m also noticing that in Europe, discussions with gatekeepers are easier”, adds the executive.

And he draws a parallel with the world of fashion. In this sector, France plays an influential role. The United States holds this status in finance.

A product has to pass through the United States to be validated worldwide. We’ve seen this with commodities, real estate and debt, for example.”

A greater democratization of crypto ETPs in France (but also in Europe) is therefore not to be ruled out. And CoinShares clearly intends to capitalize on this trend to fuel its growth.

Halving Bitcoin and demand are undeniable levers for development.

We have the organization, as well as the know-how in terms of structuring offers and regulation. We are a listed company on a regulated market,” emphasizes Benoît Pellevoizin.

And to set itself apart from other crypto asset managers in Europe, CoinShares is also asserting its position as a global player. Since last September, the London-based company has had a hedge fund offering in the United States. More recently, it confirmed its intention to exercise its call option on Valkyrie Funds, which is involved in the BTC ETF race.

Our aim is to be the global leader in asset management, by being European, but also present in the US, Latin America and Asia (…) Our ambition is to be a small crypto BlackRock.”

Institutional, RIA and retail: 3 channels and winners

In 2024, CoinShares’ strategy will be to pursue the development of ETPs in order to gain market share in Europe. In the United States, the aim is to design “a real product platform” with Valkyrie. In the Hedge Funds business, the Frenchman plans to introduce new funds. As for the overall ambition, it’s simple: “to have more assets under management”.

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The competition for Bitcoin spot ETFs promises to be fierce. Differentiation is based primarily on fees and liquidity. Distribution channels are also central. There are three main distribution channels: institutional, RIA and retail. [Ndlr : registered investment advisor] and retail.

Competition will be on fees, liquidity and distribution strategies, based on sales power and relationships with RIA networks or retail brokers,” analyzes Benoît Pellevoizin.

On the institutional side, Fidelity, Invesco and BlackRock are the best positioned, he believes. “A big battle is in store for RIAs”, he predicts. Other players will specifically target retail.

CoinShares focuses on retail and RIAs

RIA and retail are the core markets for CoinShares. In return for lower profitability?

None of the new Bitcoin ETF products are profitable. All the players have cut their management fees,” notes the executive.

For the big and old managers, however, this discount is a way of rejuvenating their clientele through a loss-leader product, he suggests. Where does CoinShares fit in?

With pension funds, it’s going to be very complicated. We’re not BlackRock or Fidelity. Nevertheless, Valkyrie and CoinShares are respected brands in the crypto community and enjoy a reputation as experts. This can speak to retail and potentially also to RIAs”, Benoît Pellevoizin deciphers.

However, the battle is longer-term. “Let’s wait 18 months. How many products will remain on the market? Will one player have won the day? If so, who? The outcome will be decided over time, he believes.

To have 5 billion under management in this type of product, which is not impossible in the United States, is a success. For BlackRock, it’s a failure. For CoinShares, it’s great (…) We’re a small company. Our goal is profitability,” he concludes.

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