The UK has given the green light for the creation of Exchange Traded Notes based on cryptocurrencies
UK OKs BTC, ETH ETNs at LSE
Institutional investors will be able to create a new type of cryptocurrency instrument in 2024, the UK’s Financial Conduct Authority (FCA) announced on February 11. More to the point, the FCA stated that it would not object to Recognised Investment Exchanges (RIEs) creating a listed market segment for crypto asset-backed exchange-traded notes (ETNs).
The FCA stated that the ETNs would be designed for professional investors such as investment firms and credit institutions. Retail investors are seen as unprepared for handling crypto asset-backed ETNs and cryptocurrency derivatives.
ETNs track an underlying asset (or index) and are usually issued by a bank or investment manager. It is up to exchanges to ensure the proper trading environment, including protecting the professional investors. In this case, the load falls on the London Stock Exchange. The exchange confirmed that it will accept bitcoin (BTC) and ether (ETH) ETN applications in Q2 2024.
More fuel on the fire
The FCA’s ruling comes after the game-changing creation of Bitcoin ETFs in States. The ETFs have created a demand for Bitcoin in particular that has driven the price to new all time highs even before the upcoming halving event cuts the number of newly minted bitcoin produced. Halving events themselves are known to cause the price of Bitcoin to rise as well.
One question that can only be resolved later is how the decision will work in light of the introduction of central bank digital currencies. Will being able to work with CBDCs bring a flurry of activity from professional investors or an avalanche?
Flurries of activity
The move comes as law enforcement in the UK takes in a decision make it easier for law enforcement to seize and destroy cryptocurrency gained through illegal means. Now, the agency responsible does not need to obtain a conviction in order to seize the crypto.
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