The location of Bitcoin and Ethereum ETFs in the United States sparked a new wave of institutional investment as previously shunned buyers have taken advantage of this new asset class. Inflows to date have been outstanding and the development of exchange-traded funds in the US market is expected to accelerate.

During 2024, we have seen the tremendous opportunity that the digital asset industry has moved forward with the adoption of Bitcoin and Ethereum spot ETFs in the United States. In the weeks following the US presidential election, digital asset fund flows into America continued to grow exponentially. During election week following Donald Trump's successful campaign for another term, the US saw $1.95 billion in inflows into digital asset ETFs, with the year-to-date total in the US reaching $29 billion. But now that these products are on the market, where do we go from here?

While the United States was late to adopt regulated crypto investment vehicles compared to its counterparts, it will benefit from the rich experience accumulated in European markets over the past decade. With a new and seemingly favorable administration taking the reins in 2025, what can the digital asset industry expect the US ETF landscape to look like? Having played a key role in advancing publicly traded crypto products in Europe as CEO of CoinShares, reflecting on the European experience can help our American counterparts navigate this new terrain and develop their markets more smoothly. crypts.

Europe's pioneering role

Europe has long been at the forefront of crypto asset class adoption, setting global standards for safe entry into the crypto ecosystem for both institutions and the public. Europe's first regulated crypto product was launched in 2015, on Nasdaq Stockholm, with the debut of a Bitcoin-backed ETP. This milestone paved the way for further innovation, with Europe's first Ether ETP following in 2017.

The regulatory journey of adopting digital asset ETPs in Europe has been complex and multifaceted. The original CoinShares XBT Bitcoin ETP Providerfollowed a similar structure to Gold ETPs in Europe. However, this original product was the only digital asset ETP available for two years, before Switzerland's Six Exchange provided a path for others to launch Bitcoin (and eventually other) ETPs on the exchange. Following this development, Germany's Deutsche Börse AG followed suit in 2020, leading to a major capital infusion into digital asset ETPs, delivering significant AUM in these products for the first time since its inception in 2015.

Since the introduction of these initial products, the European market has continued to expand and now offers over 100 different products, referring to approximately 40 different underlying assets from 20 different issuers. The landscape now includes physically backed ETPs, synthetically replicated products, and blended offerings that provide exposure to multiple cryptocurrencies or crypto-related assets. Enterprises such as CoinShares, 21Shares, WisdomTree, VanEck, Valour, Invesco, Hashdex and ETC Group, among others, now offer a variety of crypto ETP products to European investors.

While the growth of the crypto ETP market in Europe has faced challenges, including an ever-evolving regulatory landscape, these obstacles have spurred innovation and led to the creation of more sophisticated products and robust infrastructures. Europe's proactive approach to creating a regulatory environment that balances innovation with investor protection has been instrumental in the growth of crypto ETPs. As the US market develops, finding this balance will be critical to sustainable growth and investor confidence.

Infrastructure Development

While crypto ETPs operate similarly to their US ETF counterparts: both are open and exchange-traded. As a result, considering and implementing the right infrastructure is essential to ensure longevity and accessibility. This includes access to suitable trading venues, engaging market makers and regulated custody solutions and ensuring adequate liquidity on the exchange.

Major European exchanges such as Deutsche Börse Xetra, SIX Swiss Exchange and Euronext now list crypto ETPs, offering investors safe and easy methods to invest in cryptocurrencies. This infrastructure development has been crucial in driving confidence and facilitating wider adoption.

Infrastructure development did not happen overnight. It required close cooperation between ETP issuers, exchanges, market makers and regulators. Each player in the ecosystem had to adapt to the unique challenges presented by crypto assets. For example, exchanges have been at the forefront of working with their regulators to adopt digital assets as an acceptable basis

As the market has matured, we have seen a marked improvement in liquidity across European crypto ETP offerings. This has been achieved through a combination of factors, including increased competition among issuers, growing investor interest, and the entry of established financial institutions into the crypto space. Ensuring liquidity has been another critical area of ​​development. In the early days of crypto ETPs, liquidity was a significant concern for institutional investors. However, as the market has matured, we have seen a marked improvement in liquidity across European crypto ETP offerings. This has been achieved through a combination of factors, including increased competition among issuers, growing investor interest, and the entry of established financial institutions into the crypto space.

The Importance of Multiple Guardians

One of the most critical lessons learned is the importance of having multiple custodians for crypto ETPs. Crypto markets operate 24/7 and technical issues can occur at any point in the trading process – even on major exchanges like the NYSE.

To minimize the impact of such technical errors, asset managers must have robust backup plans. This includes agreements with multiple custodians to ensure that trading and settlement can continue with minimal disruption. For example, if a large custodian like Coinbase were to encounter technical difficulties, CoinShares' experience has taught us to be prepared with alternative custodian solutions.

Looking Forward

As a global leader in financial markets, the US, after Trump's victory in the election for another term as president, is well positioned to grow its domestic market for digital asset ETFs and a favorable regulatory environment prepared for innovation. With the advantage of inevitability, the US can leverage Europe's decade-long experience with crypto ETPs to avoid pitfalls and accelerate crypto adoption. Key relationships include:

• Understanding and meeting diverse customer needs with a variety of product offerings.
• Developing robust infrastructure, including reliable trading venues and liquidity providers.
• Working closely with regulators to create a balanced environment that fosters innovation while protecting investors.
• Implementing strong risk management practices, particularly in terms of custodial arrangements.

By leveraging these lessons, as the industry enters another growth cycle, the US can accelerate the development of its crypto ETF market, providing investors with safe and regulated access to this emerging asset class. The global crypto landscape is rapidly evolving and collaboration between markets will be crucial.

Jean-Marie Mognetti is the CEO of CoinShares