Executive Summary
The Story So Far
Why This Matters
Who Thinks What?
Valour, a subsidiary of DeFi Technologies, has launched a Bitcoin staking Exchange-Traded Product (ETP) on the London Stock Exchange, offering investors a 1.4% annual yield. This new product aims to provide crypto yield opportunities as the United Kingdom moves towards easing restrictions on digital assets. The ETP is backed by Bitcoin held in cold storage and secured by multiparty computation (MPC) technology, though the specific method for generating the yield was not detailed in the announcement.
Product Details and Market Access
The newly introduced Bitcoin staking ETP is currently available exclusively to institutions and professional investors. However, the regulatory landscape in the UK is evolving, with the ban on retail investors purchasing crypto exchange-traded notes (ETNs) set to be removed on October 8, lifting a restriction that has been in place since 2021. Following the announcement, shares of DeFi Technologies, Valour’s parent company, closed up by 5% on Nasdaq.
Yield Generation Methods
While the announcement did not specify how the yield for this particular ETP would be generated, Valour has a similar Bitcoin ETP listed on a French exchange that generates yield by delegating coins on the Core Chain. Core Chain is an EVM-compatible layer-1 blockchain that derives its security from Bitcoin’s proof-of-work consensus mechanism. Bitcoin itself does not natively generate staking yield, but holders can earn returns through alternative avenues such as centralized lending platforms, Bitcoin layer-2 networks like Stacks and Babylon, or by wrapping BTC into tokens like Wrapped Bitcoin (WBTC) to participate in DeFi lending protocols.
Growing Institutional Demand
The introduction of Valour’s ETP underscores a growing institutional appetite for yield-bearing Bitcoin strategies, as firms increasingly seek liquidity without divesting their BTC holdings. This trend is also evident in Coinbase’s May unveiling of a Bitcoin yield fund, specifically targeting non-U.S. institutional investors. The London Stock Exchange previously debuted Bitcoin and Ether (ETH) ETPs in May 2024, signaling a broader acceptance of digital asset investment products within traditional finance.
Looking Ahead
The launch of Valour’s Bitcoin staking ETP on the London Stock Exchange signifies the expanding avenues for investors to generate yield from their Bitcoin holdings within regulated financial markets. This development, coupled with the UK’s progressive stance on digital asset regulation and rising institutional demand, marks a significant step in the mainstream integration of cryptocurrency investment products.
