US Cryptocurrency Manager Strikes Deal to Enter European Market

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

The US crypto fund manager has reached an agreement to acquire London-based ETC Group, expanding its footprint in Europe for the first time, the groups announced on Monday.

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

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

Bitwise’s expansion comes seven years after its founding and just months after it launched two of the first bitcoin and ether-based exchange-traded funds in the U.S. While it lacks the scale and notoriety of some of its rivals, Bitwise’s Bitcoin ETF has amassed more than $2 billion since its inception.

“This acquisition allows us to serve European investors, offer clients a global view and expand the product range with innovative ETPs,” said Hunter Horsley, CEO of Bitwise, in a statement.

Bitwise said it expects to have approximately $4.5 billion in assets under management after the 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 a best-in-class company for this new asset class and has proven its professionalism and leadership over many years,” said Bradley Duke, co-founder and chief strategist of ETC Group.

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

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

ETC manages $1.1 billion across nine German-domiciled crypto exchange-traded products, including $950 million represented by its 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 areas.

“In Europe, we can do a little bit more 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 broader range of cryptocurrencies allowed, but also basket products and ETPs that involve staking.

Bitwise has a suite of over 20 products, including a leading crypto index private investment 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 last six years among advisors, institutions and investors as a sophisticated asset manager in the cryptocurrency markets, and we look forward to bringing this expertise to European investors,” Horsley said.

“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 topped $70,000 in March, May, and June, but has since retreated to around $59,000, though it remains up about 34% since January. The price of ether spiked earlier this year ahead of the launch of the first ether ETF in the U.S., but it has steadily reversed its gains since then and is up only about 11% in 2024.

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