In a recent announcement, the London Stock Exchange (LSE) confirmed plans to start accepting applications for Bitcoin and Ethereum exchange-traded notes (ETNs).
The LSE said it will begin accepting applications during Q2 2024 for ETNs that provide exposure to BTC and ETH. The move comes after the exchange published detailed eligibility requirements that crypto ETNs must meet to be listed.
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Among the key tenets, any listing must be physically backed by the underlying coins. The coins should be held in cold storage with a regulated custodian, and avoid leverage or derivatives-based strategies. Ongoing public disclosures and investor protections around these products are also mandated.
London Stock Exchange’s embrace aligns with FCA
The LSE’s embrace of crypto-tracking ETNs aligns with guidance from the UK’s Financial Conduct Authority (FCA). The FCA signaled that it would not object to exchanges making these products available to professional institutional investors.
The FCA has urged exchanges to ensure that sufficient controls are in place. They also urged that investors be properly protected when offering crypto-backed ETNs. These products must also meet requirements such as ongoing disclosure and prospectuses as part of the U.K. Listing Regime.
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The LSE’s decision to accept applications for Bitcoin and Ethereum ETNs marks a significant step forward in the integration of cryptocurrencies into traditional financial markets.
By providing a regulated avenue for professional investors to gain exposure to the performance of these digital assets, the exchange is contributing to the growing legitimacy and acceptance of cryptocurrencies in the financial world.
However, the FCA’s continued ban on the sale of crypto-backed ETNs to retail consumers serves as a reminder of the inherent risks associated with these assets.