London Stock Exchange to launch crypto ETNs on May 28

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The London Stock Exchange (LSE) is set to revolutionize the world of cryptocurrency with the launch of exchange-traded notes (ETNs) tracking the performance of popular coins such as Bitcoin (BTC) and Ether (ETH) on May 28.

Applications for these crypto ETNs can be submitted starting April 8, with the listing of successful funds scheduled for the following month, pending approval from the Financial Conduct Authority (FCA). Interested issuers must also submit a draft prospectus and a letter demonstrating their compliance with ETN requirements by April 15.

However, due to the FCA’s ban on the sale of crypto derivatives and ETNs in January 2021, these products will only be available to professional investors. To meet the FCA’s criteria, crypto ETNs must be physically backed, non-leveraged, accurately reflect the underlying market price, and be denominated in Bitcoin or Ether. The underlying assets must also be held in cold storage by an Anti-Money Laundering licensed custodian in the United Kingdom, European Union, or United States.

Issuers have the option to submit up to three different currency lines for their ETNs. The LSE emphasizes the importance of early communication with the Exchange to discuss the proposed admission process, as standard timelines do not apply for Crypto ETNs.

The decision comes after the United States Securities and Exchange Commission’s approval of spot Bitcoin exchange-traded funds in January, although without a retail investor aspect. As part of its two-year strategy, the FCA has listed strengthening its measures against market abuse in the crypto industry as one of its objectives. The regulator will enhance its monitoring and intervention systems to encompass market integrity and abuse. In October of last year, the FCA introduced new regulations for promoting crypto-related services, vowing to take “strong action” against any potential violations.

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