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London Stock Exchange welcomes Bitcoin and Ethereum exchange-traded notes

London Stock Exchange welcomes Bitcoin and Ethereum exchange-traded notes

In another positive turn of events for the cryptocurrency sector, which has recently been witnessing massively bullish sentiment, the London Stock Exchange (LSE) announced it was opening its doors to exchange-traded notes (ETNs) for the two largest crypto assets by market capitalization.

Specifically, the LSE confirmed it would accept listing applications for Bitcoin (BTC) and Ethereum (ETH) ETN in the second quarter of 2024, requiring physical support, with the underlying crypto asset stored in a cold wallet and available only to professional investors, as per documents shared on March 11.

Market notice on crypto ETNs. Source: London Stock Exchange

Furthermore, the stock exchange specified in the factsheet that the custodian(s) for the listings would be subject to the anti-money laundering (AML) regulation in the United Kingdom, European Union (or European Economic Area, where equivalent laws apply), Jersey, Switzerland, or the United States.

According to the exchange, ETNs, considered a milder substitute for exchange-traded funds (ETFs), are “debt securities which provide exposure to an underlying asset.” Investors will be able to trade the crypto ETNs “that track the performance of an underlying cryptoasset” during the exchange’s trading hours. 

Finance regulator’s input

Meanwhile, the UK’s Financial Conduct Authority (FCA) said it would not object to requests from Recognized Investment Exchanges (RIEs) to create a market segment for crypto ETNs, and would allow them to offer the products to professional investors like authorized credit institutions and investment firms.

On top of that, the agency encouraged these exchanges to make sure they have efficient methods in place to protect investors, as well as ascertain that they meet the proper requirements like those in terms of ongoing disclosure and prospectuses, which are part of the UK Listing Regime.

As a reminder, the crypto community has gone into a frenzy after the US Securities and Exchange Commission (SEC) approved multiple spot Bitcoin exchange-traded funds earlier this year and ETN approval for both Ethereum and the flagship decentralized finance (DeFi) asset in the UK could provide another boost for the entire market.

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