W Power 2024

London Stock Exchange pioneers Bitcoin and Ethereum ETN market

Starting April 8, the exchange will begin accepting applications for the trading of crypto exchange-traded notes linked to Bitcoin and Ether

Shashank Bhardwaj
Published: Mar 27, 2024 02:52:36 PM IST

On Monday, the London Stock Exchange announced its plans to introduce a market for exchange-traded notes (ETNs) based on Bitcoin (BTC) and Ether (ETH) on May 28. Starting on April 8, the Stock Exchange will begin accepting applications for trading these crypto ETNs. The market's establishment is contingent upon approval from the Financial Conduct Authority (FCA), the U.K. regulator.
Earlier in March, the FCA announced its willingness to consider requests from Recognized Investment Exchanges (RIEs) to establish a listed market segment for ETNs, a decision welcomed by the London Stock Exchange. These ETN products will be restricted to professional investors exclusively. At that time, the London Stock Exchange outlined its intention to commence accepting applications for Bitcoin and Ether ETNs by the second quarter of the year.

Regulators in the UK have been taking steps to enhance the country's crypto-friendliness, aligning with multiple announcements from the U.K. Government aimed at establishing the nation as a hub for crypto activities.

Issuers intending to establish a Crypto ETN program and list their securities on the main market must submit requisite documentation, including a base prospectus, for FCA approval by April 15, 2024.

Exchange-traded notes (ETNs), akin to Bitcoin exchange-traded funds (ETFs), are traded on stock exchanges. However, ETNs differ in being unsecured debt securities backed by the issuer's credit, while ETFs are investment funds holding the assets they track, offering direct exposure. Consequently, ETNs involve credit risk due to reliance on the issuer's solvency, whereas ETF values are directly tied to their underlying assets.

Bitcoin prices have surged dramatically, propelled by a series of positive developments within the sector. Key drivers behind the cryptocurrency's gains include robust inflows into spot Bitcoin ETFs in the US and anticipation surrounding the Bitcoin halving expected in April.

The London Stock Exchange's forthcoming market for Bitcoin and Ether exchange-traded notes (ETNs) underscores a significant step towards mainstream acceptance of cryptocurrencies. The supportive stance of UK regulators, particularly the Financial Conduct Authority, reflects a broader trend towards embracing digital assets. Moreover, as the UK government strives to position itself as a crypto-friendly hub, such developments pave the way for the integration of blockchain technology and digital currencies into traditional financial systems.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist.
Twitter: @bhardwajshash