"Finam Pioneers: First Russian Bitcoin ETF Exposure via BlackRock's iShares"

Russian brokerage Finam is set to launch investment products tied to BlackRock’s iShares Bitcoin Trust ETF (IBIT), providing qualified investors in Russia with exposure to spot Bitcoin ETFs for the first time. The new investment product, structured notes based on BlackRock’s iShares Bitcoin Trust ETF, will be exclusively available to qualified investors in Russia and will have a six-month maturity period.

Finam’s upcoming IBIT bond will be denominated in Russian rubles, with the yield calculated at the dollar equivalent based on the exchange rate of the Bank of Russia. Investors will receive up to 20% in dollar yields if the price of the Bitcoin ETF at the note’s maturity exceeds the price at the time of the product launch by at least one basis point. The minimum investment amount is 200,000 rubles or roughly $2,200 at the time of writing, with a brokerage commission of 1% in rubles.

In addition to the structured IBIT bond, Finam plans to introduce more similar products tied to Ether (ETH) spot ETFs. This move comes as Russia has been opening up to Bitcoin in recent months, with the Finance Minister stating that the local legislation allows for the use of digital financial assets, including Bitcoin, by December 2024.

However, Finam’s IBIT bond presents a complicated legal case in Russia. While some consultants argue there are no legal restrictions for similar products, others see certain risks in offering structured notes based on cryptocurrency ETFs. Russia’s crypto law “On Digital Financial Assets” does not view crypto assets as securities, while structured bonds are precisely securities. The law does not contain a direct ban on the use of crypto ETFs as an underlying asset for structured bonds but does not provide a legal basis for such products either.