Cryptocurrencies continue to fight their way towards entering the mainstream, with the most recent victory happening in Germany. The country’s second-largest stock exchange, Börse Stuttgart, has just approved ETN’s (Exchange-Traded Notes) for two cryptocurrencies — Litecoin (LTC) and XRP.
Two new ETNs
The stock exchange’s team noted the achievement, saying that this is the first time that Germany’s investors will be able to purchase and sell ETNs based on digital currencies. The move might have been inspired by the recent addition of four securities issued by XBT provider in Sweden.
Just like ETFs, ETNs are transparent, strictly regulated, and highly protected investment instruments. Investors can use them for investing in various other assets, which is an important achievement for the two coins, but also the entire crypto space. Now that XRP and LTC ETNs are on a massive and respected stock exchange, their liquidity is likely to significantly increase.
However, what is more important is that this increase will be amongst institutions, and accredited investors. In other words, while cryptocurrencies have always been available on various crypto exchanges — they were never particularly attractive to accredited investors and institutions. The reason for that is simple — there was a lack of investor protection, and that is the major issue for professionals.
While they know how to deal with volatility, they are not prepared to risk experiencing losses due to hacks and thefts. Instead, the road to including institutions and accredited investors appears to be through ETNs, ETFs, and other, similar means. This was confirmed by billionaire Mark Cuban back in 2017, who had invested in BTC via ETN on a stock exchange based in Sweden.
Back then, Cuban argued that crypto investing was interesting, as there are many assets which have their value based on nothing more than supply and demand. There is no intrinsic value among most stocks, as you do not really get ownership rights, nor any voting rights. All that the investors really have is the ability to purchase or sell stocks. Bitcoin is similar in that regard, and its value depends on supply demand.
Now, the same firm that made Bitcoin ETNs on the Swedish stock exchange possible decided to help bring XRP and LTC ETNs to Börse Stuttgart. The exchange’s Director Blue Chips & Funds Trading, Jürgen Dietrich, commented on the new move saying that there is a massive amount of interest in digital currencies. Now, with the addition of the two coins’ ETNs, the investors in Germany will have the ability to track their future price and its development.
How will the move reflect on Litecoin and XRP?
One of the big questions right now is whether the move will have a noticeable impact on the two coins. Litecoin (LTC), for example, already surged by 183% in 2019. The improved performance of the price has mostly believed to have come thanks to the focus of the developer community, which has been working hard on privacy-related solutions.
Litecoin’s Charlie Lee commented earlier this year, stating that the only property of sound money that assets like BTC and LTC lack, is fungibility. However, with the scaling issue out of the way, fungibility and privacy are the main focus of LTC, while the fungibility is being resolved through the addition of Confidential Transactions.
Lee also mentioned that the developers debated regarding the best way to add Confidential Transactions for hours on end. In the end, it would appear that they decided to do a softfork CT, which is not unlike doing extension blocks or extension blk.
Even so, another important question is whether or not Germany’s investors would want to purchase Litecoin ETNs. While the crypto market is currently seeing massive recovery, it is unclear whether or not it will attract investors, or if the addition will actually help the recovery of LTC. But, as many were quick to notice, it certainly won’t hurt the coin in any way, so the move is celebrated as a major achievement.