In case you’re under any illusions, crypto is back, and the London Stock Exchange (LSE) has given it a huge regulatory boost.
The LSE announced today that it will start accepting applications for the admission of bitcoin and ether crypto exchange-traded notes (ETNs) in the second quarter of this year.
ETNs are debt securities that provide exposure to an underlying asset. Crypto ETNs enable investors to trade securities that track cryptoassets on-exchange during London trading hours, and they are traded on their own dedicated trading segments.
Conditions for LSE admission
According to a factsheet published by the LSE, the Exchange will only consider applications for admission in respect of Crypto ETNs where the issuer can demonstrate:
The proposed Crypto ETN is physically backed, has a reliable and publicly available market price or other value measure of the underlying, and has Bitcoin or Ethereum underlying crypto assets.
The underlying cryptoassets must be wholly or principally held in ‘cold storage’ or subject to arrangements that achieve an equivalent outcome to cold storage and held by a custodian or custodians subject to AML regulation in the UK, EU (or EEA, where equivalent laws apply), Jersey, Switzerland, or US.
Further, crypto ETNs admitted to trading on LSE are only appropriate for professionals and are only available under trading segments specifically designated as “Professional investors only.”
According to the LSE, “the exact launch date will be confirmed in due course.”
Still, it encourages early engagement from prospective issuers interested in admitting Crypto ETNs to trading on the Exchange.
The UK’s Financial Conduct Authority (FCA) stated today that it will not object to requests from Recognised Investment Exchanges (RIEs) to create a UK-listed market segment for crypto asset-backed Exchange Traded Notes (cETNs).
It specifies that:
“Exchanges will need to continue to ensure sufficient controls are in place, so trading is orderly and proper protection is afforded to professional investors.
ETNs must meet all the requirements of the UK Listing Regime, for example on prospectuses and on-going disclosure.”
The LSE’s move follows the SEC's approval of the first Bitcoin ETFs (exchange-traded funds) to be listed on US exchanges in January.
Lead image: "London Stock Exchange" by jam_90s is licensed under CC BY 2.0.
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