The London Stock Exchange intends to potentially list Bitcoin and Ethereum exchange-traded notes (ETNs) by the second quarter of this year, as revealed in a Mar. 11 market notice.
This followed the UK’s Financial Conduct Authority (FCA) approval for Recognised Investment Exchanges (RIEs) to establish a listed market segment dedicated to crypto asset-backed ETNs, according to a Mar. 11 statement.
Crypto ETNs, akin to exchange-traded funds (ETFs), monitor an underlying asset or index, but unlike ETFs, they are debt securities, essentially bonds. Typically, ETNs don’t possess the assets they track and are backed by a financial institution. Profit realization in ETNs occurs upon note maturity or investor sale.
This announcement coincides with Bitcoin’s recent stellar performance, hitting an all-time high of more than $71,000 earlier today, and Ethereum is also enjoying an uptrend that has pushed it above $4000.
No retail access
The Crypto ETNs will be exclusively accessible for trading by professional investors in alignment with the UK’s FCA prohibition on selling crypto derivatives and ETNs to retail consumers.
The financial regulator stated:
“These products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only.”
FCA also reiterated its usual warning about crypto being a high-risk and unregulated investment product. As such, its ban on crypto derivatives trading for retail investors remains in place because of the harm it poses.
Admission requirements
The LSE stated that the crypto ETNs must be physically backed and non-leveraged.
The issuers must possess a publicly available market price or value measure of the underlying asset, with BTC or ETH as the underlying digital assets.
Furthermore, the exchange emphasizes that the underlying digital assets must be predominantly held in a cold wallet or secure storage. Additionally, these assets must be held by a custodian compliant with anti-money laundering (AML) laws in the United Kingdom, the European Union, Switzerland, or the United States.
Meanwhile, LSE said it retains discretion in refusing applications from any issuer.
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