Crypto asset trading has moved further into the institutional mainstream after the London Stock Exchange (LSE) and UK regulator the FCA gave the green light to the trading of bitcoin and ethereum Exchange Traded Notes (ETNs).
The announcements came as bitcoin topped the $71,000 dollar mark for the first time. The leading cryptocurrency had gone above $70,000 for the first time last week, and broke the $71,000 barrier during Asian trading hours on Monday. Ethereum broke $4,000 for the first time during the same period.
The LSE confirmed early on the morning of March 11 that it would “accept applications for the admission of bitcoin and ethereum crypto ETNs in the second quarter of 2024 and in accordance with the details contained in the crypto ETN factsheet available on the Exchange’s website”. It will confirm the exact date “in due course”.
Early engagement
The factsheet says that “In order to mitigate the risk of delay in the admission timetable, the Exchange encourages early engagement from prospective issuers interested in admitting Crypto ETNs to trading on the Exchange”.
The FCA said it “will not object to requests from Recognised Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs)”. It emphasised the products would “only be available to professional investors”.
The regulator stressed that it “continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose. As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place”.
This means “We will review applications for cETNs to be listed on the UK RIEs for professional only market segments,” but “It is for the RIEs to put the professional only market segments in place”.
Millions of dollars
These latest moves come in the wake of hundreds of millions of dollars flowing into spot bitcoin ETFs after US regulator the SEC approved them in January. BlackRock’s iShares Bitcoin Trust (IBIT) crossed the $10 billion assets under management mark last week, after just seven weeks of trading.
And, at the end of trading last week, the total trading volume for US spot bitcoin EFTs stood at $106.59 billion, according to data gathered by Yahoo finance for crypto news site The Block.
Crypto investing remains a heavily debated area, but if you follow the money it’s clear there is strong demand from investors for the products now being made available. But becoming just another asset to be traded within the traditional financial system is not the vision many crypto evangelists had.
One inescapable fact remains. Cryptoassets are highly volatile, and even professional investors must be prepared for the possibility of losing all their money. These are certainly new times, and there are almost certainly some big twists and turns ahead.