The London Stock Exchange (LSE) is gearing up to introduce a new financial product that’s got the world of digital currencies buzzing. On May 28, the LSE will roll out exchange-traded notes (ETNs) that follow the performance of two of the biggest names in cryptocurrency: Bitcoin and Ether. This move is part of a growing trend to merge the fast-paced world of digital currencies with the traditional finance sector, offering a new avenue for professional investors to dive into the crypto pool.
Starting from April 8, those interested in these crypto ETNs can throw their hats in the ring, with the hopes of getting their funds listed the following month. However, there’s a catch: the U.K.’s Financial Conduct Authority (FCA) has the final say, and applicants need to convince them they’ve got what it takes by submitting a draft prospectus and a compelling letter by April 15.
The catch is that these ETNs aren’t for everyone. Following a 2021 decision by the FCA, only professional investors can get their hands on them. The FCA’s rules are strict: these crypto ETNs need to be backed by the actual cryptocurrencies, not leveraged, and their value must closely mirror the real-time market prices of Bitcoin or Ether. Plus, these digital assets have to be stored securely, away from the prying eyes of potential hackers, by a custodian licensed to prevent money laundering in the UK, EU, or US.
The LSE mentions that the usual timelines for admission don’t apply here, highlighting the unique nature of these crypto ETNs. They’re encouraging issuers and their advisors to get in touch sooner rather than later to chat about their potential listing.
This step by the LSE mirrors actions taken in the United States, where the Securities and Exchange Commission gave the green light to Bitcoin exchange-traded funds, though these are still out of reach for the average retail investor. It’s all part of a broader move by financial regulators, like the FCA, to tighten the reins on the crypto market, aiming to curb market abuse and ensure the integrity of digital currency trading. With new rules for crypto-related marketing that promise strict actions against violations, the FCA is making it clear that it’s watching the crypto space closely.
For enthusiasts and professionals keen on the intersection of digital innovation and finance, this development is a notable milestone. It highlights the ongoing integration of cryptocurrencies into the broader financial landscape, reflecting both the opportunities and the regulatory challenges that come with it.
To delve deeper into this exciting development and its implications for the world of Web3, blockchain, and digital currencies, check out the original report by Zhiyuan Sun on Cointelegraph through this link.