American crypto-manager closes deal to enter European market

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Bitwise Asset Management has completed the second takeover of a European cryptocurrency specialist by a US financial group in the past three months.

The US crypto fund manager has struck a deal to acquire London-based ETC Group, expanding its footprint into Europe for the first time, the groups announced on Monday.

The deal is another sign of how the much larger US investment market is giving American companies the firepower to expand into the European market, where asset managers such as BlackRock, Vanguard and Fidelity have built strong positions.

The deal comes after California-based retail broker Robinhood acquired European cryptocurrency exchange Bitstamp for $200 million in June.

Bitwise’s expansion comes seven years after it was founded and months after it launched two of the first bitcoin and ether exchange-traded funds in the US. Despite lacking the size and name recognition of some of its rivals, Bitwise’s bitcoin ETF has raised more than $2 billion since its debut.

“This acquisition allows us to serve European investors, provide clients with a global perspective and expand our product suite with innovative ETPs,” Bitwise chief executive Hunter Horsley said in a statement.

Bitwise said it expects to have about $4.5 billion in assets under management post-acquisition. The deal is Bitwise’s first in Europe, and ETC Group employees will be retained while its crypto products will be rebranded as Bitwise vehicles.

“We believe Bitwise is building the best firm for this new asset class and has proven its professionalism and leadership over many years,” said ETC Group co-founder and chief strategist Bradley Duke.

“Bitwise and ETC Group are kindred spirits in the way we run our businesses, in the way we only specialize in digital assets and crypto products.

“Their footprint is entirely in the US. Our footprint is almost entirely in Europe. It’s a stronger story together,” said Duke, with ETC’s only operations outside of Europe being its Middle East, Africa and Asia distribution channels. Its products are not licensed for sale in the US.

ETC manages $1.1 billion in nine Germany-based crypto-traded products, of which $950 million is represented by the flagship Physical Bitcoin ETP (BTCE).

Its lineup includes funds focused on second-tier cryptocurrencies such as solana, litecoin and cardano, going beyond what is currently allowed in the US, where only bitcoin and ether have been approved for ETFs. This will allow Bitwise to expand into new fields.

“We can do more in Europe than in the US, so they will be able to implement some of their product ideas through us as an issuer,” Duke said. “The market here is more evolved than in the US,” with not only a wider range of cryptocurrencies allowed, but also basket products and ETPs that engage in the stake.

Bitwise has a stable of over 20 products, including a large crypto index private placement vehicle, separately managed accounts and private funds, as well as its ETFs.

Terms of the deal were not disclosed.

“We are proud of the reputation we have built over the past six years with advisors, institutions and investors as a sophisticated asset manager in the crypto markets, and we look forward to bringing this expertise to European investors,” said Horsley.

“It’s a little sad to see (our brand) go, but everyone is excited about the new owners and the work we can do as part of a larger, more global digital asset company,” Duke said.

Bitcoin rose above $70,000 in March, May and June, but has since fallen to around $59,000, although it remains up about 34% since January. The price of Ether skyrocketed at the start of the year ahead of the launch of the first Ether ETF in the US, but since then has steadily pared its gains and is only up about 11% so far this year.

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