UniCredit, a distinguished Italian banking institution, has introduced a unique financial product for Italian professional investors—a five-year certificate tied to BlackRock’s iShares Bitcoin Trust ETF. Starting from July 1, this certificate promises a principal-protected investment opportunity, allowing clients to contribute a minimum of $25,000 until July 28, 2025. The investment ensures security of the principal amount, with a yield cap set at 85% of the ETF’s performance.
How Does the Certificate Work?
This U.S. dollar-denominated certificate shields investors from Euro currency volatility. Investors are guaranteed to retain their initial investment at maturity, even though any gain is limited to 85% of the ETF’s upward movement. This limit implies that if the ETF value doubles, gains will not exceed 85% of the rise.
Why Choose Crypto-based Certificates?
UniCredit’s Global Wealth Management Head, Chicco Di Stasi, highlighted the growing desire among professional investors in Italy for crypto-oriented products.
“This certificate represents a pioneering effort in Italy, with full protection reducing the risks of venturing into the cryptocurrency domain,”
he stated.
According to documents seen by Bloomberg, the certifying orders were accepted starting July 1, aligning the issue price with the ETF’s closing values, with the trading timeline concluding on August 5.
UniCredit’s effort underscores a creative approach by banks to navigate the lack of European approval for a spot Bitcoin ETF. In response, Intesa Sanpaolo marked its initial spot Bitcoin acquisition, and Banco Santander is exploring the offer of cryptocurrency services via its online channels. These certificates serve as stopgaps in current regulatory frameworks.
Experts advocate for principal-protected structures as a way for institutional players to foray into cryptocurrency markets sans the complexities of digital wallet technology. This format, grounded in traditional securities, eases both trading and custody tasks.
- UniCredit’s certificate is a novel instrument supporting principal protection.
- Professional investors are the target, with an entry investment of $25,000.
- European approval for spot Bitcoin ETFs is still awaited, highlighting the need for interim solutions.
- Potential for widespread adoption in banking exists if regulatory success is achieved.
With the European Union on the cusp of new MiCA regulations offering clearer cryptocurrency directives, significant banks may opt for well-established ETFs abroad, leveraging them as stopgap offerings to fulfill the burgeoning customer demand in the crypto financial landscape.
