LSE Welcomes Bitcoin & Ethereum ETN Requests Amid UK FCA’s Policy Shift

In a bold move amid the evolving regulatory landscape, the London Stock Exchange (LSE) has announced its decision to accept Bitcoin & Ethereum ETN requests. Notably, the acceptance of applications for Bitcoin and Ethereum Exchange Traded Notes (ETNs) marks a significant shift in traditional financial markets.

This decision aligns with the growing interest in digital assets and comes amid FCA’s new stance on the crypto ETN market.

LSE To Accept Bitcoin & Ethereum ETN Requests

The London Stock Exchange (LSE) recently declared its readiness to accept applications for the admission of Bitcoin and Ethereum crypto ETNs in the second quarter of 2024. The recent announcement from LSE has sparked curiosity as well as discussions in the crypto market, especially with growing institutional interests in the crypto sector.

Meanwhile, the recent success of the U.S. Spot Bitcoin ETF, which also helped in sending Bitcoin to its ATH has bolstered investors’ confidence. Given that, several other global players like Hong Kong, and others are exploring opportunities in the segment.

However, this recent move highlights LSE’s acknowledgment of the burgeoning interest in digital assets among investors. According to the Exchange’s press release, the exact launch date for these ETNs will be communicated in due course. This step is poised to open new avenues for investors seeking exposure to cryptocurrencies through regulated channels.

Despite the dovish stance, LSE’s criteria for admission emphasize the need for stringent safeguards, reflecting a cautious approach towards crypto assets. The Exchange requires that the proposed Crypto ETNs be physically backed, ensuring they are non-leveraged and possess a reliable market price or value measure.

Moreover, the underlying “cryptoassets”, Bitcoin or Ethereum, must be held in ‘cold storage’ or equivalent arrangements, bolstering security measures. These prerequisites aim to uphold the reputation and integrity of LSE’s markets amidst the evolving cryptocurrency landscape.

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FCA’s Regulatory Stance On Crypto ETNs

The announcement from LSE comes at a time when the Financial Conduct Authority (FCA) in the UK has provided updates on the regulatory stance regarding cryptoasset Exchange Traded Notes (cETNs). In other words, the UK’s Financial Conduct Authority (FCA) has updated its stance on cryptoasset Exchange Traded Notes (cETNs), allowing Recognised Investment Exchanges (RIEs) to create a UK listed market segment for these products, exclusively for “professional investors”.

This decision follows rigorous assessment and collaboration with industry stakeholders. Meanwhile, the FCA emphasizes that cETNs and crypto derivatives are unsuitable for retail consumers due to associated risks, maintaining the ban on their sale to this demographic.

While the regulatory landscape for cryptoassets in the UK evolves, the FCA remains vigilant, working with government and international partners to develop robust regulatory frameworks. In addition, the FCA continues to prioritize consumer protection, advising investors to exercise caution due to the high-risk nature of cryptoassets.

Meanwhile, both FCA and LSE underscore their commitment to maintaining market integrity and combating financial crime within the crypto space, leveraging existing powers to uphold regulatory standards and safeguard consumer interests.

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