The London Stock Exchange (LSE) has announced plans to accept applications for Bitcoin and Ether crypto exchange-traded notes (ETNs) in the second quarter of 2024.
The London Stock Exchange (LSE) has announced plans to accept applications for Bitcoin and Ether crypto exchange-traded notes (ETNs) in the second quarter of 2024. However, the exact date has yet to be confirmed.
According to the LSE's Crypto ETN Admission Factsheet, eligible ETNs must be physically backed and non-leveraged. They must also be backed by Bitcoin or Ether and have a market price or value measure of the underlying asset that is publicly available.
The underlying crypto assets must be held in a cold wallet or similar storage solution, including cold staking, and by a custodian subject to Anti-Money Laundering laws in the United Kingdom, the European Union, Switzerland, or the United States.
ETNs are debt securities that provide exposure to an underlying asset. They allow investors to trade securities that track the performance of crypto assets during the exchange's trading hours.
The U.K.'s Financial Conduct Authority (FCA) has stated that it will not object to requests from Recognised Investment Exchanges (RIEs) to create a market segment for crypto-backed ETNs.
However, these products can only be offered to "professional investors," such as credit institutions and investment firms. However, it will not be available to retail investors, with the statement saying:
“The FCA continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose. As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place.”
The FCA has also emphasized that cryptocurrencies are still deemed “high risk and largely unregulated,” and warns the public that their investments could go to zero. The UK government has recently ramped up regulatory efforts in the crypto industry, including allowing law enforcement to seize crypto assets suspected of being involved in illicit activities without a conviction.
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