London Stock Exchange to Accept Bitcoin and Ethereum ETN Applications in Q2
The London Stock Exchange (LSE) has made a significant move in the cryptocurrency space by announcing its decision to accept applications for the admission of bitcoin and ether crypto exchange-traded notes (ETNs) in the second quarter of 2024. This development comes amidst growing interest from institutional investors and regulatory clarity provided by the Financial Conduct Authority (FCA).
The LSE’s decision follows the guidelines outlined in its Crypto ETN Admission Factsheet, which emphasizes the importance of certain criteria for admission. Notably, crypto ETNs admitted to trading on the LSE will be restricted to professional investors, a move aligned with the FCA’s stance on ensuring these products are not accessible to retail consumers due to their inherent risks.
According to the factsheet, crypto ETNs must be physically backed and non-leveraged, with a reliable and publicly available market price or value measure of the underlying asset, which in this case, are Bitcoin or Ethereum. Additionally, the underlying crypto assets must be held in cold storage or arrangements that achieve an equivalent outcome, and custodians must adhere to Anti-Money Laundering regulations in specific jurisdictions.
ETNs, described as debt securities providing exposure to an underlying asset, offer investors the opportunity to trade securities tracking crypto assets during London trading hours. They are considered a softer alternative to exchange-traded funds (ETFs), offering a unique investment avenue for institutions seeking exposure to the crypto market.
The FCA’s supportive stance further reinforces the legitimacy of crypto-backed ETNs in institutional circles. While the FCA acknowledges the potential benefits of these products for professional investors, it continues to emphasize the high risks associated with cryptoassets, cautioning investors to be prepared for the possibility of losing all their invested funds.
The LSE’s decision to accept bitcoin and ether ETN applications comes at a time when spot bitcoin exchange-traded funds (ETFs) in the United States have gained significant traction, surpassing $100 billion in cumulative trading volume since their launch in January. This milestone underscores the increasing acceptance of cryptocurrencies within traditional financial markets.
