UK Bitcoin ETP

YEREVAN ( — The UK has started approving Bitcoin Exchange-Traded Products (ETPs), mirroring the recent ETF approvals in the US.

US Bitcoin ETPs Will Go Live in Q2 2024

The London Stock Exchange (LSE) said it will open up for Bitcoin and Ether exchange-traded notes (ETNs) applications in the UK starting the second quarter of 2024, based on the rules in their Crypto ETN Admission Factsheet. The exact start date for accepting these applications wasn’t given.

The London Stock Exchange is opening its doors to Bitcoin and Ether ETNs in Q2 2024.
The London Stock Exchange is opening its doors to Bitcoin and Ether ETNs in Q2 2024. Source X

These UK Bitcoin ETPs need to be physically backed by Bitcoin and cannot use leverage. They also require a publicly available price or value measure for the underlying crypto asset.

UK Bitcoin ETPs: Safe Storage and Investment Basics

The exchange requires storing the crypto assets for ETNs mainly in cold wallets or similar secure storage. They must also be in the custody of someone who follows Anti-Money Laundering laws in the UK, EU, Switzerland, or the US.

UK Bitcoin ETPs are debt securities that let investors gain exposure to an asset. Crypto ETNs let people trade securities that follow the value of crypto assets during trading hours on the exchange.

People often view ETNs as a softer option compared to ETFs. But unlike ETFs, which are backed by a collection of assets, ETNs are debt obligations backed by the issuers themselves. ETFs usually deal with complex debt strategies that aren’t suitable for regular funds.

FCA Greenlights Specialist Crypto ETN Market for Experts

The UK’s Financial Conduct Authority (FCA) said it’s okay for Recognised Investment Exchanges to set up a special market for ETNs backed by cryptocurrencies. They said these products target “professional investors” such as banks and investment companies permitted in financial markets.

Financial Conduct Authority (FCA) will start accepting applications for Bitcoin and Ethereum
Financial Conduct Authority (FCA) announcement. Source: X

The FCA wants exchanges to have strong measures to keep UK Bitcoin ETP investors safe. They also mentioned that these crypto-backed ETNs need to follow rules like sharing ongoing information and having prospectuses, which are part of the UK’s rules for listed companies.

However, the FCA warned that these ETNs are not for everyday investors because they’re too risky. They’ve banned selling these ETNs to the general public. The FCA reminded everyone that investing in cryptocurrencies is very risky, and people could lose all their money.

Tailing US Steps

Let’s remember that in January 2024, the SEC approved several Bitcoin ETFs. This big move is a first for spot Bitcoin ETFs, making them different from the Bitcoin futures ETFs already out there.

The SEC wants these ETPs, which hold actual Bitcoin, to share all the right details to keep investors safe. This approval opens up more of the US market for Bitcoin trading and stresses the rules in place to stop fraud. The SEC will closely monitor to ensure adherence to these rules and the protection of investors.

SEC Approves Trading of Spot Bitcoin
SEC Approves Trading of Spot Bitcoin. Source: X

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