Bank of America’s prime brokerage unit has started the clearing and settlement of cryptocurrency exchange-traded products (ETPs) for hedge funds in Europe, according to three sources with knowledge of the matter.
Bank officials may have felt they could not ignore an asset class that has seen numerous companies dive in. The demand for products such as ETPs has been increasing.
In February it emerged that Goldman Sachs, ICAP, JPMorgan and UBS have all been purchasing the 21Shares Polkadot ETP for clients, according to Bloomberg data. In June, ETC Group launched the first bitcoin ETP in the U.K. on the Aquis Exchange in London.
According to CoinDesk’s sources, hedge funds are using Bank of America’s prime brokerage unit to access a raft of crypto ETPs approved by European regulators. The vehicles allow big firms to invest in various corners of the crypto universe without investing in crypto directly, but through a security that tracks the performance of various digital assets.
A Bank of America spokesperson declined to comment.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.