The London Stock Exchange (LSE) announced on Monday that it will accept applications for listing cryptocurrency exchange-traded notes (Crypto ETNs) for Bitcoin and Ethereum, starting from April 8. The first batch of approved cryptocurrency ETNs is expected to be officially listed on May 28.
Background:
The UK accelerates cryptocurrency regulation! Stablecoins and collateral legislation expected to be completed within 6 months.
After the Financial Conduct Authority (FCA) in the UK announced in March the opening of applications for cryptocurrency ETNs, the London Stock Exchange (LSE) issued a public announcement on Monday, stating that it will accept applications for the listing of Bitcoin and Ethereum cryptocurrency 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 a prospectus and a letter explaining how their application meets 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 ban on the sale of cryptocurrency derivatives and ETNs issued by the FCA in January 2021, unlike Bitcoin ETFs in the US which are available to 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 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 the issuer must meet the following requirements to issue Bitcoin and Ethereum ETNs: (a) physically backed, i.e., non-leveraged; (b) the underlying market price or other value measurement is reliable and publicly available; (c) Bitcoin or Ethereum is used as the underlying cryptocurrency.
The underlying cryptocurrency must be held primarily or entirely in “offline storage,” including offline custody, or held by custodians regulated by anti-money laundering regulations in the UK, the European Union (or equivalent laws applicable to 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 has attracted £15.7 billion:
Previously, after the US Securities and Exchange Commission (SEC) approved the listing of a Bitcoin spot ETF in January this year, it has attracted a net inflow of $15.7 billion to date. However, currently, UK retail investors cannot purchase US Bitcoin ETFs. Bivu Das, Managing Director of Kraken UK, expressed support for the approval of Bitcoin ETF listing in the UK this week.
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