The global Swiss banking and financial institution, Vontobel (SIX : VONN) has introduced a new product for their esteemed customers which enables them to trade bitcoin indirectly. The new product is a financial instrument similar to share certificates linked to the bitcoin value and it is available for regular investors in the stock market.
Bitcoin has been a popular alternative tradable financial asset for more than 5 years now. The digital currency is widely traded over various Bitcoin and Cryptocurrency exchanges across the world. Regular bitcoin traders usually trade bitcoin against cash or other digital currencies. Bitcoin trading activity usually runs in parallel to traditional trading with both rarely crossing paths until now.
The bitcoin-linked certificate will be issued, starting July 15. The first certificates issued by the Bank Vontobel will have an approval from the Swiss Exchange for a period of 2 years. The certificates will also become available for investors in the secondary markets at the prevailing buy and sell prices.
These certifications, better known as tracker certificates will have the same value as its underlying asset, which in this case is bitcoin. In the case of volatility in bitcoin prices, the certificate value will also fluctuate in accordance with the bitcoin trading market. This way, investors will be able to tap into the benefits of bitcoin trading and make profits from the digital currency’s volatility through a conventional stock market channel.
With no clear regulations set for bitcoin trading at the moment, the Vontobel issued Bitcoin tracker certificates is one of the very few ways currently available to trade the digital currency in traditional markets. Even though the actual value of the certificate will remain same as that of bitcoin, the price may vary in secondary markets.
Whether these certificates will be successful or not is another question, as trading bitcoin directly over a cryptocurrency exchange is much simpler and faster compared to trading tracker certificates. It is also worth noting that anyone can trade bitcoin against other digital currencies or fiat by just signing into a Bitcoin exchange after fulfilling simple AML and KYC requirements. But in order to trade these tracker certificates, the trader may have to go through additional formalities.
By the end of this month we will have a better picture about the future of bitcoin tracker certificates and in the near future, some of the stock traders involved in the tracker certificate may jump into mainstream bitcoin trading too.
Ref: Handelszeitung |Image: Vontobel