As expected, the introduction of Bitcoin ETFs has spurred another wave of demand for cryptocurrencies. However, European traders can’t invest directly in these increasingly popular instruments.

To solve this issue, the Polish brokerage firm XTB (WSE: XTB) has just offered an alternative to these instruments, announcing the addition of three new exchange-traded products (ETPs). This move gives investors more ways to gain exposure to the digital assets.

XTB Introduces New Investment Options for Cryptocurrencies

The new products include two exchange-traded notes (ETNs) focused solely on Bitcoin and one ETN based on a mix of the ten most popular cryptocurrencies. They come amid growing investor demand for crypto assets as new Bitcoin ETFs launch in the US.

“We are regularly answering investors’ questions about when they can start investing in Bitcoin ETFs in Europe,” said Filip Kaczmarzyk, the Member of the XTB Management Board. “While we don’t know the answer, we wanted to find an alternative given the interest in crypto.”

Starting from this week, XTB’s offering will include three new ETNs:

• BTCetc Bitcoin Exchange Traded Crypto,
• VanEck Bitcoin ETN,
• VanEck Crypto Leaders ETN.

Filip Kaczmarzyk, XTB

XTB said it decided to add ETNs given their long-standing availability in Europe. Over the years, leading brokers have used them to give clients access to hard-to-reach assets.

“Until now, XTB offered the possibility of investing in cryptocurrencies only through CFD contracts,” Kaczmarzyk added. “However, seeing the demand from investors, we decided to find an alternative for those who are looking for similar opportunities that American ETFs offer.”

For XTB, this is another new feature in their offering after the fintech announced at the beginning of the month that it wants to enter the UK’s £400 billion Individual Savings Accounts (ISAs) market. Finance Magnates discussed ISAs with Joshua Raymond, the CEO of XTB UK.

How ETN Works?

Exchange-traded notes (ETNs) are debt securities that are designed to track the performance of an underlying asset or index. They have gained popularity among investors looking for easy access and tax advantages. But how exactly do they work?

ETNs are issued by financial institutions like banks. When investing in an ETN, you essentially lend money to the issuing bank. In return, the bank promises to pay you back the principal plus or minus any changes in the value of the index or asset that the ETN tracks.

ETNs function similarly to ETFs in that they trade on exchanges like stocks. One major advantage of ETNs is the tax treatment. Unlike funds that distribute dividends, ETN investors defer all taxes until sale or maturity. At that point, profits are taxed as long-term capital gains. This can mean significant tax savings.

However, they carry more risk as they are unsecured debt instruments. If the issuer goes bankrupt, investors may lose their investment.

XTB Reports 2023 Numbers and Presents 2024 Roadmap

XTB has unveiled its preliminary financial results for 2023, showcasing a remarkable 51% increase in active clients, totaling 311,971. Despite market volatility and inflationary pressures, the company achieved a 3% year-over-year (YoY) growth in net profit, amounting to PLN 791.3 million.

The revenue also saw a significant uptick, with a 10% YoY increase to PLN 1,588.2 million, attributed to the increased volatility in financial and commodity markets and a substantial growth in its customer base.

In addition to its financial achievements, XTB has announced its product roadmap for 2024. This roadmap signifies the company’s evolving focus towards passive investments, social trading, and the advanced application of AI technology, moving beyond its roots in the FX/CFD industry.

Among the notable initiatives is the plan to expand its fixed-income offerings, making bond investments more accessible through a mechanism akin to fractional shares. Starting from investments as low as EUR 10, XTB will offer a diversified portfolio that includes a mix of government and corporate bonds, prioritizing high ESG ratings and secure ratings between AAA to BBB.

Source