The London Stock Exchange (LSE) intends to launch Exchange-Traded Notes (ETNs) on May 28, which will monitor the performance of Ether and Bitcoin cryptocurrencycurrencies. Commencing on April 8, the Financial Conduct Authority (FCA) of the United Kingdom will review and approve applications for these cryptocurrencycurrency ETNs. In order to adhere to ETN regulations, issuers are required to file a preliminary prospectus and a statement of compliance no later than April 15th.
Crypto ETNs must be physically backed, non-leveraged, and valued in Bitcoin or Ether to meet FCA criteria. They must also be stored in cold storage by authorized custodians in the United States, United Kingdom, or the European Union, with a continuous market value.
Despite high demand from investors, these ETNs will only be offered to accredited investors because the UK FCA has outlawed the retail sale of cryptocurrency derivatives and ETNs beginning in January 2021. In March 2024, the FCA stated that it would not restrict Recognized Investment Exchanges (RIEs) from establishing a cryptocurrencycurrency ETN market sector.
The FCA’s two-year priorities include tightening laws to prevent bitcoin market exploitation and enhancing market integrity monitoring systems. This is consistent with their previous efforts, which included implementing new restrictions governing cryptocurrencycurrency marketing in October of last year.
Due to different admission timeframes, issuers may propose up to three separate currency lines for the ETNs; however, previous discussions with the LSE are necessary. This comes after the US Securities and Exchange Commission approved exchange-traded funds for spot Bitcoin in January, but with limited access for normal investors.
In response to the rising interest in digital assets, the London Stock Exchange has established cryptocurrency ETNs for professional investors, signaling regulatory caution.
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