London Stock Exchange to List Bitcoin (BTC) and Ethereum (ETH) ETNs
The Financial Conduct Authority (FCA) has recently noted that it does not have any objections regarding requests for crypto-backed ETN market. On this account, the London Stock Exchange (LSE) noted that the platform is working on listing Bitcoin and Ethereum-based exchange-traded notes. The LSE administrators intend to receive these ETNs during the second quarter of the ongoing year.
On 11th March, the trading platform noted that it will accept applications provided that they are in line with the guidelines of digital asset ETN admission factsheet. At the same time, the exchange has refrained from sharing the exact date about when it would start accepting Bitcoin and Ethereum ETN applications.
The exchange mentioned in the factsheet that crypto ETNs have to be physically backed and non-leveraged entities. Additionally, these ETNs should have a market price and value measure of the underlying asset trading on a public scale and must have Bitcoin or Ethereum backing. At the same time, these ETNs have to be comprehensively stored in a cold-storage wallet or with offline custodian.
Financial Firms to File for Bitcoin and Ethereum ETNs in London
The regulators have retained that the custodian services providers for Bitcoin and Ethereum storage products should conform to anti-money laundering laws of the United Kingdom. At the same time, these custodians should also be in line with the AML regulations of EU, Switzerland and United States. The trading platform has defined ETNs as debt-securities that will provide exposure to underlying digital assets.
ETNs Vs ETFs
Cryptocurrency ETNs ensure that investors are able to trade securities that track the performance of crypto reserves during the exchange business hours. It is important to mention that ETNs are alternative forms of ETFs where ETNs with a few differences.
ETNs are debt-instruments that are backed by issuers rather than pool of assets. ETFs also have debt strategies but they are pedantic in nature and do not fit into the funds with relative ease.
On the other hand, the FCA also announced that it does not have an objection about Recognized Investment Exchanges (RIEs). As per FCA notification, exchange platform can offer products to professional investors with inclusion of credit issuing firms and investment companies that operate in regulated or authorized financial markets.
Only Institutional Investors have Access to Crypto ETNs
The regulator has further stated that exchange have to ensure sufficient control to protect investors. At the same time, FCA stated that crypto-backed ETNS should complete requirements such as reserves disclosure and prospectus that are part of the listing procedure in the UK.
At the same time, FCA also issued guidelines for institutional offering of ETNs noting that these products are unsuitable for retail investors on account of associated risks.
The FCA also notified investors that cryptocurrencies are volatile and risky investments. The regulator reiterated that digital currencies are not regulated entities. Therefore, the investors who are putting their money into cryptocurrencies should be prepared to lose it.
This advice is in line with the fundamentals of investing that dictates that investors should only invest the amount of capital in a market that they can afford to lose.
Bitcoin, the flagship cryptocurrency, recently recorded $71K for the first time. This was shortly followed by Ethereum printing $4000 for the first time since 2021. The new ATH was recorded on 11th March.
As per CoinMarketCap projections, Bitcoin prices increased by 10% for the last 7 days. At the same time, Bitcoin prices increased by 47% during the last month. The new ATH of Bitcoin was recorded 36 days ahead of the next halving event set to take place sometime in April of 2024.
After the fourth and final halving, the mining reward of Bitcoin will be reduced from 6.25 to 3.125 BTC. As per Cointelegraph analysis, the Bitcoin bullish movement is attributed to institutional inflows by the way of Bitcoin spot ETF listings. Since 11th Jan, Bitcoin spot ETFs have accumulated 4.06% of the total supply.
