Specialist crypto ETP provider ETC Group has unveiled its third product, the LTCetc – ETC Group Physical Litecoin ETC (ELTC GY).
Bradley Duke, CEO of ETC Group.
Set to debut on Deutsche Börse Xetra on 14 April, the ETP will provide institutional investors with fully backed exposure to litecoin.
Litecoin, currently the world’s ninth-largest crypto asset by market cap, originated in October 2011 as an early spinoff from bitcoin. It is similar to bitcoin in that it has a fixed supply (programmed to be four times the eventual supply of bitcoin) and undergoes regular block reward ‘halvings’.
The main difference between the two cryptocurrencies is that litecoin delivers a faster block generation time of two and a half minutes, compared to ten minutes for bitcoin. It is this feature that has helped established litecoin as the go-to cryptocurrency for users seeking to conduct transactions quickly.
Sometimes referred to as the silver to bitcoin’s gold, litecoin has grown by 390% in the past 12 months while bitcoin has rallied 670% over the same period (performance data relative to the US dollar).
As with ETC Group’s existing ETPs – the $1.3bn BTCetc – ETC Group Physical Bitcoin (BTCE GY) and the $15m ETHetc – ETC Group Physical Ethereum (ZETH GY) – ELTC is being brought to market in partnership with London-based white-label issuer HANetf, which is advising on operations and taking lead responsibility for product marketing and distribution.
Each unit of ELTC will be “physically” backed by approximately 0.1 litecoins at launch, providing investors with direct exposure to the cryptocurrency with the added oversight, security, and liquidity of an ETP.
By investing in the ETP, investors will be able to bypass the technical challenges of purchasing litecoin directly from cryptocurrency markets such as setting up a digital wallet, managing cryptographic keys, or trading on unregulated crypto exchanges.
The ETP is cleared through a central counterparty (CCP) system, as opposed to bilateral settlement, reducing the counterparty risk that market participants are exposed to. This feature is significant for institutional investors which are typically prevented from trading non-centrally-cleared instruments.
The ETP comes with an annual fee of 2.00% and is tradeable in euros.
It is the second directly backed litecoin ETP to list in Europe following the CoinShares Physical Litecoin (LITE SW) which debuted on SIX Swiss Exchange earlier this month. LITE comes with an expense ratio of 1.50%.
Regulated, secure, liquid
Bradley Duke, CEO of ETC Group, said: “The current economic uncertainty has underlined the attraction of crypto assets for investors as they offer opportunities for diversification from traditional assets such as equities and bonds, and strong hedging qualities against inflation. But it is a crowded market with more than 8,700 cryptocurrencies, making it difficult for investors to select assets and to store and manage them. Institutional investors are demanding regulated crypto products that are secure, liquid, and central counterparty cleared, and ETC Group is building products that adhere to the complex and exacting standards of the institutional investor.”
Hector McNeil, co-Founder and co-CEO at HANetf, added: “We are excited to be supporting the ongoing expansion at ETC Group and the launch of their third crypto ETC with the listing of ETC Group Physical Litecoin ETC. ETC Group is firmly established as a market leader in offering investment products focused on crypto assets. The huge success of their first product, BTCE, which reached over $1 billion in assets in just over seven months since listing demonstrates the growing demand for products that enable investors to avoid concerns about the technical challenge of buying and storing cryptocurrencies. ETPs are listed on a regulated exchange and investors buy them through regulated brokerages. This is arguably the most robust way to trade and invest in cryptocurrencies.”