Thomas Daniels
The London Stock Exchange (LSE) is poised to commence the trading of Bitcoin and Ethereum exchange-traded notes (ETNs) starting May 28, contingent on the approval of the Financial Conduct Authority (FCA). This development is preceded by the LSE’s announcement to accept listing applications for cryptocurrency ETNs from April 8, representing a pivotal integration of digital currencies into the United Kingdom’s financial marketscape.
This innovative initiative aims to draw a broad spectrum of issuers and investors, mirroring the success Bitcoin ETFs have garnered in the United States since their inception in January. The LSE has delineated clear guidelines for potential issuers, stipulating an April 15 deadline for the submission of requisite documentation, including a base prospectus for FCA evaluation.
ETNs and ETFs, while both traded on stock exchanges, diverge fundamentally in structure. ETNs, unsecured debt securities reliant on the issuer’s creditworthiness, contrast with ETFs, which directly hold the assets they aim to track, thus offering tangible exposure. This distinction underscores a key risk associated with ETNs; their value hinges on the issuer’s fiscal health, unlike ETFs, whose value is intrinsically linked to the assets within the fund.
