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Coinbase and Zodia Custody act as custodians for the digital assets underlying the ETCs.
DWS Group (DWS), an asset management giant managing almost €900 billion in assets, has partnered with Galaxy Digital Holdings Ltd. to introduce two new Xtrackers ETCs: the Xtrackers Galaxy Physical Bitcoin ETC securities and the Xtrackers Galaxy Physical Ethereum ETC securities. These new ETCs were listed on Deutsche Börse today, as DWS shared in a recent press release.
An exchange-traded commodity (ETC) functions as a debt security similar to an exchange-traded note (ETN) but with added protections for investors. These protections include collateral, limited recourse, and bankruptcy remote issuer. Unlike ETNs, ETCs can track single assets or smaller, focused baskets of assets.
According to Manfred Bauer, Global Head of DWS’ Product Division and Member of the Executive Board at DWS Group, the growing value of Bitcoin and Ethereum is making it impossible for investors and financial institutions to simply ignore them. With this launch, DWS seeks to provide investors with direct access to Bitcoin and Ethereum.
“Since the first Bitcoin transaction in 2009, digital assets have developed from a niche technology innovation to a globally recognized asset class. With a combined market capitalization of more than USD 1.7 trillion, Bitcoin and Ethereum alone are now too significant for investors and asset managers to ignore,” stated Bauer.
The strategic partnership between DWS and Galaxy aims to accelerate digital asset adoption in Europe, leveraging their collective expertise, noted DWS. Through this collaboration, Galaxy will equip DWS with the tools and expertise to offer institutional-grade access to digital assets for European investors.
“We are delighted to be working with Xtrackers to offer investors institutional-grade access to digital assets and to support them with our deep digital asset expertise,” commented Steve Kurz, Global Head of Asset Management at Galaxy.
As noted in the press release, each ETC is supported by segregated offline storage solutions provided by Zodia Custody and Coinbase, ensuring the safekeeping of digital assets.
With an annual product fee of just 0.35%, DWS expects that these ETCs will be a cost-effective option for investors looking to tap into the digital asset market. The firm claims that its new products will offer the ease of trading an ETP with the perceived safety of having an underlying physical asset.