Following on from a few months where more and more large, traditional institutions have been getting into the cryptocurrency scene, today marks another landmark. The Boerse Stuttgart, which is the second largest stock exchange in Germany and the ninth largest in Europe, has approved listings of XRP and Litecoin ETNs (Exchange Traded Notes).
“For the first time in Germany, investors can now buy and sell exchange-traded notes (ETNs) based on the cryptocurrencies Litecoin and Ripple (XRP). The four securities issued by XBT Provider in Sweden track the price of the two cryptocurrencies in relation to the euro and the Swedish krona.”
ETNs are very similar to ETFs (Exchange Traded Funds), in that both are strictly regulated. They are a transparent and protected instrument that investors use to invest in a wide variety of different assets. The liquidity of both Litecoin and XRP is expected to increase following the listing of the ETNs on Stuttgart’s stock exchange.
Quality of liquidity is rising with institutional involvement
Cryptocurrency exchanges have been great for individuals due to the liquidity requirements being almost non-existent and having fantastically easy access. However, the problem comes in with the lack of regulation and the lack of protections that entailed which was a major roadblock for many investors looking into crypto trading.
ETN’s from major financial institutions are, however, helping both investors and the market at large. Mark Cuban, the billionaire owner of the Dallas Mavericks, spoke at the Vanity Fair New Establishment Summit in 2017 and mentioned Bitcoin ETNs that he had bought from a Swedish stock exchange.
“It is interesting because there are a lot of assets which their value is just based on supply and demand. Most stocks, there is no intrinsic value because you have no true ownership rights and no voting rights. You just have the ability to buy and sell those stocks. Bitcoin is the same thing. Its value is based on supply demand. I have bought some through an ETN based on a Swedish exchange. “
The same company that is responsible for Mark Cuban’s bitcoin ETNs is also responsible for listing Litecoin and XRP in Stuttgart. This will give accredited investors, a class above normal individuals, a safer alternative to buy XRP and invest in other cryptocurrencies.
Litecoin and XRP might see a boost from listing
Litecoin has increased since the start of the year, much like many other cryptocurrencies. The strong performance of Liteocin, in particular, is attributed mainly to the developer community focusing on issues of privacy, which seem to have gained steam over the last six months.
The listing itself will add much-needed liquidity to both Liteocin and XRP, with a whole new class of investors coming on board who will bring a lot more money. Accredited investors that buy XRP will likely bring more stable liquidity than individuals with no history of investment.
However, that does not change the plans significantly for Litecoin. The creator of Litecoin, Charlie Lee, said that with the scalability issue behind them, the team had focused on making Litecoin more fungible. Fungibility and privacy were the last to things that Liteocin needed to be like real money and that was the focus for the developers.