The London Stock Exchange (LSE) has announced its plans to launch exchange-traded notes (ETNs) for Bitcoin (BTC) and Ethereum (ETH) on May 28, providing investors with investment products that track the performance of these cryptocurrencies.
Applications for crypto ETNs can be submitted starting from April 8, with successful funds expected to be listed the following month, subject to approval from the country’s Financial Conduct Authority (FCA). In order to be considered, issuers must submit a draft prospectus and a letter explaining how they meet the requirements for ETNs by April 15.
To gain approval, the crypto ETNs must be physically backed, non-leveraged, have a reliable value based on the underlying market price, and be denominated solely in BTC or ETH. Furthermore, the underlying assets must be held in cold storage by a custodian licensed for Anti-Money Laundering regulations in the United Kingdom, European Union, or United States.
However, it is important to note that these ETNs will only be available to professional investors, as the UK FCA has prohibited the sale of crypto derivatives and ETNs to retail investors since January 2021.
In its two-year plan, the FCA has expressed its intention to strengthen measures against market abuse in the crypto space. In October of the previous year, the FCA implemented new regulations for crypto-related marketing, emphasizing its commitment to taking robust action against any potential breaches.