London Stock Exchange (LSE) announced on Monday that it will accept applications for listing Crypto Exchange Traded Notes (Crypto ETNs) for Bitcoin and Ethereum, starting from April 8. The first batch of approved Crypto ETNs is expected to be officially listed on May 28.
(Previous Summary:
UK opens “Crypto Asset ETN Trading Notes” to professional investors, LSE accepts BTC and ETH ETN applications in Q2)
(Background Supplement:
UK accelerates cryptocurrency regulation! Stablecoins and pledge new regulations expected to be legislated within 6 months)
Following the Financial Conduct Authority’s (FCA) announcement in March to open applications for Crypto ETNs, the London Stock Exchange (LSE) issued a notice on Monday, announcing that it will accept applications for listing Bitcoin and Ethereum Crypto ETNs starting from April 8. The first batch of ETNs approved by the FCA is expected to be officially listed on May 28.
BTC/ETH ETN Application Details
According to the announcement, issuers must submit prospectuses and letters explaining how their applications meet the requirements for ETNs to the London Stock Exchange by April 15.
Despite strong investor interest, ETNs will only be open to professional investors due to the FCA’s ban on the sale of cryptocurrency derivatives and ETNs issued in January 2021, unlike the Bitcoin ETFs in the United States which can be traded by retail investors.
There are differences between Exchange Traded Notes (ETNs) and Exchange Traded Funds (ETFs).
ETNs are unsecured debt securities typically issued by banks, whose returns are linked to the performance of their underlying index but do not actually own the assets. ETFs, on the other hand, are investment funds that directly invest in assets such as stocks, cryptocurrencies, or commodities and provide returns based on the performance of these assets. Investors actually own a portion of the fund’s assets.
The London Stock Exchange had previously issued application guidelines, stating that to issue Bitcoin and Ethereum ETNs, the issuer must meet the following requirements:
(a) The proposed Crypto ETNs must be physically supported, meaning they are non-leveraged.
(b) The underlying market price or other value measurements must be reliable and publicly available.
(c) Bitcoin or Ethereum must be used as the underlying cryptocurrency.
The underlying cryptocurrency must be primarily or fully held in “offline storage,” including offline collateralization, or held by a custodian regulated under anti-money laundering regulations in the UK, EU (or equivalent laws applicable in the European Economic Area), Jersey, Switzerland, or the United States.
According to the London Stock Exchange’s explanation, issuers can submit up to three types of token ETNs.
US Bitcoin Spot ETF attracted $15.7 billion
Previously, after the US Securities and Exchange Commission (SEC) approved the listing of Bitcoin Spot ETF in January this year, it has attracted a net inflow of $15.7 billion. However, currently, UK retail investors cannot purchase US Bitcoin ETFs. Bivu Das, Managing Director of Kraken UK, expressed his support for the approval of Bitcoin ETF listing in the UK earlier this week.
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