London Stock Exchange to Introduce Crypto ETNs, Opening New Avenues for Institutional Investors
However, it emphasized that the market for crypto ETNs would be contingent upon approval from the UK regulator, the FCA.
The London Stock Exchange (LSE) has unveiled plans to launch Bitcoin and Ether exchange-traded notes (ETNs) on May 28, 2024. This development follows the recent approval from the Financial Conduct Authority (FCA) on March 11, granting the LSE the green light to list cryptocurrency offerings tailored specifically for professional investors.
The announcement, made on Monday, marks a milestone in the evolution of cryptocurrency adoption within institutional circles. It signifies a notable shift in sentiment towards digital assets, with major financial institutions increasingly recognizing the legitimacy and potential of cryptocurrencies as investable assets.
According to the LSE's statement, the exchange will commence accepting applications for physically backed crypto ETNs from April 8. However, the market for crypto ETNs will be subject to approval from the UK regulator, the FCA, underscoring the importance of regulatory compliance in the nascent crypto market.
The decision to launch on May 28 is strategic, allowing sufficient time for issuers to meet regulatory requirements and ensuring maximum participation on the first day of trading. The deadline for applications, including the submission of a base prospectus for FCA approval, is set for April 15.
Importantly, the LSE's criteria for listing crypto ETNs prioritize assets backed by physical Bitcoin and Ether holdings stored in cold storage. This emphasis on security and transparency reflects the exchange's commitment to maintaining robust standards in the nascent crypto market.
While the move is hailed as a significant step forward for institutional adoption of cryptocurrencies, some industry stakeholders have raised concerns about the FCA's decision to limit access to crypto ETNs exclusively to professional investors. Critics argue that this restriction may hinder broader participation in the burgeoning crypto market.
With the launch of crypto ETNs, institutional investors will gain access to a new avenue for exposure to cryptocurrencies, further blurring the lines between traditional finance and the digital asset ecosystem.
