Grayscale Investment LLC, the operator of the world's largest cryptocurrency fund, is making its European debut with an exchange-traded fund (Crypto ETF) that tracks a host of companies that handle digital assets, rather than a product tied to the price of Bitcoin itself.
The fund manager will launch the Future of Finance UCITS ETF (ticker GFOF) on the London Stock Exchange, Borsa Italiana and Deutsche Börse Xetra on Monday, in partnership with white-label ETF platform HANetf.
GFOF, which first launched in the U.S. in February, tracks the investment performance of the $443 billion Bloomberg Grayscale Future of Finance index, with holdings including Robinhood Markets Inc, Block Inc and Coinbase Global Inc.
Grayscale is currently lobbying U.S. regulators for permission to convert its $19 billion Bitcoin Trust (ticker GBTC) into an ETF that would directly track the price of Bitcoin. Spot Bitcoin ETFs have not yet been approved in the U.S.
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The company is entering a competitive market in Europe, where spot crypto exchange-traded products from competitors, such as CoinShares International Ltd and 21Shares AG, have been available on local exchanges for several years.
Michael Sonnenshein, Grayscale’s CEO, told Bloomberg in an interview that while the company has “high confidence in investors who want to have exposure to digital assets,” he viewed the Future of Finance ETF as the “most liquid way” for investors to share in that value.
“What we’re finding is that a lot of people are equating the ability to invest in a whole new thematic investment category with what they might have experienced if they had started investing in cloud computing or other categories a decade ago,” Sonnenshein said. “Those would be the nets that would have captured an opportunity.”
The performance of both Grayscale's Bitcoin Trust and the Future of Finance ETF have suffered in recent months as the broader crypto market has swung between periods of sideways trading and extreme volatility.
GBTC shares hit a record discount to Bitcoin's price on Tuesday after a meeting with the Securities and Exchange Commission regarding the ETF application, according to data compiled by Bloomberg, while the U.S.-listed GFOF ETF has posted a three-month return of -42.6% since May 13.
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Bloomberg revealed last month that Grayscale planned to conduct a series of tests across the continent. Sonnenshein declined to comment on whether the company might launch crypto spot products in Europe in the future, saying that talks with partners to date had focused on an equity launch.
“It’s important to take a bigger step back for the performance over the last couple of weeks and months,” Sonnenshein said, adding that thematic investing is a relatively new area for the European crypto market.
“What we are seeing and hearing is the growing popularity of ETFs in Europe, not only significant interest in thematic investments but also in crypto-related products as well as ESG. Many investors are starting to gravitate towards the familiarity and protection offered by the ETF wrapper,” he said.
