According to the latest announcement from the London Stock Exchange (LSE), the exchange has confirmed that it will start accepting applications for listing Bitcoin and Ether ETNs in the second quarter of 2024. ETNs, similar to ETFs, are typically issued by banks or investment managers to track the price fluctuations of underlying indices or assets. The key difference between the two is that ETNs can operate without holding the corresponding underlying assets.
According to the announcement, the exchange will only consider applications for crypto ETNs that meet the following criteria:
1. Physical backing is required.
2. There must be a reliable and publicly available market price.
3. The underlying crypto assets must be Bitcoin or Ethereum.
4. The assets must be stored in cold wallets and third-party audit reports must be provided.
5. The custodians must be subject to AML regulations in the UK, EU, Switzerland, or the US.
6. The ETNs are only applicable to professional investors and can only be traded during designated time periods.
Meanwhile, the Financial Conduct Authority (FCA) of the UK also stated in a press release that the regulatory body will not oppose requests from “Recognized Investment Exchanges (RIEs)” to establish separate markets for cryptocurrency ETN products. The FCA mentioned that the exchanges will be responsible for ensuring sufficient control measures are in place for orderly trading and providing appropriate protection for investors.
However, the regulatory body also emphasized that these products will only be available to professional qualified investors such as investment firms and credit institutions, and retail investors will be prohibited from trading such commodities.
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