Sweden's Nasdaq Exchange Approves Bitcoin-based ETN

Sweden's Nasdaq exchange has approved a bitcoin-based exchange traded note (ETN), opening up investment in the digital currency to those who do not want to directly purchase and hold bitcoins.

The Bitcoin Tracker One, launched by Stockholm-based XBT Provider AB, which is owned by the KnC Group and is expected to launch on 18th May.

In a statement, Alexander Marsh, chief executive officer of XBT Provider AB, said:

"By enabling this easy and secure way to invest in bitcoin we hope to have eliminated the boundaries that earlier prevented individuals and companies from being able to actively invest in what we believe to be the future of money."

A spokesperson for Nasdaq confirmed that XBT Provider AB had been approved as a certificate issuer and that its product was the first bitcoin-based item to be listed on the Swedish exchange.

How it works

According to XBT Provider AB's website, the bitcoin ETN is traded in the same way as all other listed instruments on the Nasdaq exchange.

In order to invest, users must have an account obtained through their bank, advisor or online broker.

XTB Provider AB will hedge all sales of the bitcoin traded note by buying an equal value in the bitcoin market.

Johan Wattenström, head of trading at KnCMiner and partner at XBT Provider AB, said:

"We are aiming to do all hedging in the open market but have the option to access bitcoin liquidity from KnC Group in case of an emergency."

When asked about its security procedures, Wattenström said the company had implemented a "secure multi-layer process for handling and safekeeping bitcoins".

He also referred to the company's safety policy, which states: "A small part of the holdings can be kept on bitcoin exchanges, if deemed necessary additional coins can be held on a multi-signature hot wallet and all holdings over a threshold must be kept in safe storage."

Community Reaction

Joakim Herlin-Ljunglof, marketing manager at Stockholm-based bitcoin exchange BTCX, commented on the approval, noting how it could impact the discussions between companies operating in the bitcoin space and traditional banks, regulators and investors. He added:

"It is really cool that my country and city is, apparently, the first in the world to do this."

The news also struck a chord with the international cryptocurrency ecosystem. Dr Timo Schlaefer, co-founder and CEO of Crypto Facillities, a London-based broker specialising in bitcoin derivatives, said:

"I think that it would be very useful for investors as it removes the need to go out and buy and store bitcoin directly, which requires a good understanding of how to handle bitcoins. It also opens up the market to investors who require exchange traded products or may not be allowed to hold bitcoins for regulatory or compliance reasons."

Wattenström said XBT Provider AB aimed to offer a range of additional investment products in the future.

Stockholm image via Shutterstock.