Crypto ETNs to Debut on the London Stock Exchange in May

The London Stock Exchange (LSE) has announced plans to introduce exchange-traded notes (ETNs) for Bitcoin and Ether starting May 28.

These ETNs will track the performance of the cryptocurrencies and will provide a structured investment product that mirrors their market movements.

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The issuers can request applications from April 8. Those who would like to list securities on May 28 must submit a detailed prospectus and a letter explaining how they meet the requirements for consideration by April 15. The LSE encourages interested issuers to engage as early as possible to reduce the risk of delay in the admission timetable.

The approval process, overseen by the Financial Conduct Authority (FCA), mandates that the ETNs have to be non-leveraged, ensure a reliable and publicly available market price, and have BTC or ETH underlying assets.

The LSE also adds:

The underlying crypto assets must be wholly or principally held in 'cold storage' <...> and held by a custodian or custodians that are subject to AML regulation in the United Kingdom, European Union (or European Economic Area, where equivalent laws apply), Jersey, Switzerland or United States.

Issuers can admit up to three different currency lines for each crypto ETN.

However, this initiative is limited to professional investors, reflecting the FCA's cautious stance towards retail participation in crypto derivatives and ETNs, a policy enacted in January 2021.

The launch of crypto ETNs underscores the increasing recognition and integration of digital assets within regulated financial systems, marking an essential step in offering structured, secure investment opportunities in the digital currency sphere.

This initiative parallels the US Securities and Exchange Commission's recent approval of spot Bitcoin ETFs.