The oldest and arguably most important cryptocurrency – Bitcoin – has seen a rapid increase in value since its introduction in 2008. That caught the attention of investors. For those investors who want to participate in the performance of Bitcoin but do not want to invest directly in the cryptocurrency, the Vontobel participation certificates on Bitcoin could be an interesting investment option. The certificates are easy to invest and, due to their subscription ratio, the certificates make it possible to invest in the performance of Bitcoin even with smaller amounts. In addition, with the certificates, the risk of possible loss of coins through hacker attacks is not passed on to investors.
The price development of the oldest cryptocurrency is quite impressive. This was in part characterized by strong upward and downward movements; but the price rallies that have taken place in the meantime, such as those that were observed at the beginning of this year, are impressive. The interest in Bitcoin as well as the need to participate in its price development has grown steadily; both with private and institutional investors.
This is also shown by the latest news from Germany, according to which institutional investors will be allowed to invest in cryptocurrencies via so-called special funds from August. The share of cryptocurrencies in these special funds can now amount to 20%. If you extrapolate that, based on the current fund volume, up to 350 billion euros could flow into the crypto market (source: Börsen-Zeitung 23.04.2021) – so far, the crypto market comprises around 1.8 trillion euros. That could further boost the crypto market. It remains to be seen, however, whether and to what extent such inflows will occur.
Vontobel’s participation certificates offer an interesting investment opportunity for investors who want to participate in the price development of the cryptocurrency – but who do not want to invest directly in Bitcoin.
New participation certificates available on Bitcoin
In April of this year, Vontobel issued a new participation certificate on Bitcoin to enable investors to easily participate in the performance of the Bitcoin price. In the new participation certificate, there is a variable management fee of currently 3.75%, which is priced in pro rata on a daily basis. The cost structure of the new product reflects the increased regulatory capital requirements for the issuer group in Switzerland. However, the certificates have other properties: They are easy to invest and, thanks to their subscription ratio, they make it possible to invest in the performance of Bitcoin even with smaller amounts. With the new certificates, Vontobel continues to refrain from passing on the risk of a possible cyber attack or theft of coins that may be held as security in accordance with the conditions of the certificate; the risk of possible loss of coins through hacker attacks is therefore not passed on to the investor.
Without a wallet – without the risk of theft of coins:
Vontobel’s listed participation certificates enable investors to participate in the Bitcoin price development without having to have access to a Bitcoin platform with a wallet. This has the advantage that the risk of losing Bitcoins through hacker attacks, technical problems, improper handling or through the failure of the Bitcoin custodian does not lie with you as the investor in the certificate.
Can be invested even in small amounts
Bitcoin is a phenomenon that has continued to fascinate many investors for several years. Sometimes the large price jumps in both directions are also a reason why Bitcoin can be found more and more in the business news. In the past it was still affordable – today it is difficult to acquire for small investors, as Bitcoin has become relatively “expensive” over the years. According to Coinmarketcap, the rate is currently US $ 48,718.75 (as of August 22, 2021) – and that’s not even the maximum amount. Bitcoin reached a value of almost 60,000 US dollars per coin at its peak in May of this year (source: Coinmarketcap). The new participation certificates from Vontobel have a subscription ratio of 1: 100. This ensures that participation in the price development of Bitcoin is possible even with small amounts.
Easy to trade
Bitcoin certificates are a prime example of how special markets and underlying assets can be made accessible and investable. Thanks to the successful symbiosis of “participation certificate” and “bitcoin”, investors have a securitized security at hand for the digital currency “bitcoin”, which can be seamlessly integrated into existing securities accounts. The certificates can easily be traded on the stock exchange at the current bid / ask price. Under normal market conditions, Vontobel provides the necessary liquidity so that the certificates can be traded.
From the old to the new
Vontobel is adapting its product range in the Bitcoin area to the current regulatory framework. The old Bitcoin participation certificates (ISIN DE000VL3TBC7 and DE000VL6LBC7) have therefore been canceled with effect from September 10, 2021. As an investor in the canceled certificates, you now have two options:
- You can sell the old participation certificate on Bitcoin until September 7, 2021 at the current bid price via broker / house bank or stock exchange and invest in the new certificate issued by Vontobel to continue your investment on Bitcoin.
- Alternatively, you can wait and hold the canceled certificate until the cancellation date (September 10, 2021). The official cancellation amount per certificate will be determined in accordance with the terms and conditions and will be paid to you by September 17, 2021. This process is automatic if you do not sell your position beforehand. This guarantees an investment in the Bitcoin product until September 10, 2021. Investors can then realize potential income and invest part or all of this in the new participation certificate.
Market risk / price change risk: The value of the certificate can also fall significantly below the purchase price during the term due to the factors that determine the market price if the value of the underlying Bitcoin falls. With cryptocurrencies such as Bitcoin, a very high range and frequency of fluctuation (volatility) is still to be expected. There is no capital protection for the certificate.
Issuer / credit risk: Investors are exposed to the risk that the issuer and guarantor may not be able to fulfill their obligations from the product and the guarantee – for example in the event of insolvency (insolvency / overindebtedness) or an official order of resolution measures. Such an order by a resolution authority can also be issued in the run-up to insolvency proceedings in the event of a crisis in the guarantor. A total loss of the capital employed is possible. As a debt security, the product is not subject to any deposit protection.
Currency risk: Since the base value for the certificate is the Bitcoin rate in US dollars, the value of the certificate also depends on the development of the exchange rate between US dollars and euros.
Product cost: The management fee in the certificate reduces the performance of the certificate compared to the underlying.
This information is neither an investment advice nor an investment strategy or investment recommendation, but advertising. The complete information on the securities, in particular on the structure and the risks associated with an investment, is described in the base prospectus, including any supplements, and the respective final terms. The base prospectus and the final terms represent the only binding sales document for the securities and can be accessed via the respective product link. It is recommended that potential investors read these documents before making any investment decision in order to fully understand the risks and rewards of deciding to invest in the Securities. The documents and the key information sheet are published on the issuer’s website, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, at prospectus.vontobel.com and are available from the issuer for free. Approval of the prospectus is not to be understood as an endorsement of the securities offered. The securities are products that are not simple and can be difficult to understand. This information contains information that relates to the past. Past performance is not a reliable indicator of future results.
This information contains information that relates to the past. Past performance is not a reliable indicator of future results.
This information contains information that relates to simulated past performance. Past performance is not a reliable indicator of future results.
This information contains information that relates to future performance. Such forecasts are not a reliable indicator of future performance.
This information contains information relating to the tax treatment of securities. This depends on the personal circumstances of the respective customer and may be subject to changes in the future.
Bank Vontobel Europe AG
Bockenheimer Landstrasse 24
60323 Frankfurt am Main
Telephone: 00 800 93 00 93 00
Fax: +49 (0) 69 69 59 96-3202
Bank Vontobel Europe AG
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Supervisory board: Dr. Thomas Heinzl (Chair)
Board of Directors: Thomas Fischer, Andreas Heinrichs, Anton Hötzl
Registered in the commercial register at the Munich Local Court under HRB 133419
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