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The London Stock Exchange (LSE) is set to commence trading exchange-traded notes (ETN) that are backed by Bitcoin and Ethereum. The local financial authority indicated that it would not oppose the establishment of crypto-related investment products, provided that their issuers adhere to regulatory standards.
The LSE revealed that it will begin accepting crypto exchange-traded notes (ETN) in the second quarter of 2024, contingent upon the issuers fulfilling the exchange’s criteria.
An ETN (exchange-traded note) is a category of financial instrument that signifies a debt obligation. When investors acquire ETNs, they essentially provide a loan to the issuer, receiving a commitment for repayment in return. In contrast to ETFs, exchange-traded notes carry lower risk as they rely solely on the issuer’s creditworthiness.
The LSE will only entertain applications for trading crypto ETNs from issuers that satisfy the following conditions:
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- ETNs must exclusively be based on Bitcoin or Ethereum;
- ETNs should not be margin notes but must be genuinely backed by assets;
- ETNs must possess a market price or another valuation metric;
- Assets supporting crypto ETNs must be stored in cold wallets or custodial offline wallets, with custodians adhering to the AML regulations of the United Kingdom, European Union, Switzerland, and the United States.
The LSE characterizes ETNs as “debt securities which provide exposure to an underlying asset.” Crypto ETNs will enable investors to trade securities that reflect the performance of crypto-assets during exchange trading hours.
In the meantime, the Financial Conduct Authority (FCA) stated that it would not obstruct the development of crypto exchange-traded notes. However, access to these new investment products will be restricted to “professional investors,” meaning those under the oversight of the financial authority. Retail investors will not have access to crypto-based investment products. The FCA will also ensure that the LSE can implement “sufficient controls” over trading to safeguard investors and that crypto ETN issuers comply with local regulatory listing standards.
The FCA sanctioned a tokenization model for investment fund assets in 2023.
Сообщение U.K. Investors to Gain Access to Crypto-Based Financial Assets появились сначала на CoinsPaid Media.
