London Stock Exchange Opens Doors to Bitcoin and Ethereum ETNs

The UK's premier stock exchange is set to accept applications for cryptocurrency-tied financial instruments.

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  • The London Stock Exchange will begin accepting applications for Bitcoin and Ethereum ETNs in Q2, 2024.
  • Crypto ETNs will be available only to professional investors under specific trading segments.
  • Each crypto ETN can offer up to three different currency lines, according to the LSE factsheet.
  • Custody of underlying cryptocurrencies must primarily be in cold storage, adhering to strict AML regulations.
  • Following the announcement, Bitcoin’s price surged above $71,000 while Ethereum exceeded $4,000.

The London Stock Exchange (LSE) has announced its plans to start accepting applications for the admission of crypto exchange-traded notes (ETNs), specifically tied to Bitcoin (BTC) and Ethereum (ETH), starting in the second quarter of 2024.

This move marks a significant step towards integrating digital currencies into traditional financial markets by one of the world’s leading stock exchanges.

  • Exchange-traded notes (ETNs) are a type of unsecured debt security issued by financial institutions. They are designed to track the performance of a specific index or asset class and they can be trade on stock exchanges, similar to stocks or exchange-traded funds (ETFs). Unlike ETFs, ETNs do not hold underlying assets; instead, they are backed by the creditworthiness of the issuer.

Details regarding the exact launch date for these crypto ETNs remain undisclosed but are expected “in due course.” The introduction of such financial instruments aligns with guidelines outlined in a recently published crypto ETN factsheet by the exchange.

This document specifies that trading in these innovative products will be restricted solely to professional investors.

It further elaborates that issuers may present up to three distinct currency lines per each type of crypto ETN offered.

An important stipulation mentioned is that custodians managing the underlying cryptocurrencies must prioritize cold storage solutions while complying with anti-money laundering (AML) standards across several jurisdictions including the U.K., E.U., Jersey, Switzerland, or the U.S.

In response to this groundbreaking news from LSE, there was an immediate reaction within cryptocurrency markets.

Prices for both major digital assets saw notable increases; Bitcoin ascended past $71,000 while Ethereum climbed over $4,000.

Although it remains uncertain if this surge directly correlates with LSE’s announcement concerning their forthcoming acceptance of crypto-related financial products.

The decision by LSE does not come as an isolated endeavor toward incorporating web3 technologies into its operations.

In fact, as early as September last year, London Stock Exchange Group had already disclosed intentions towards adopting blockchain technology within traditional market frameworks—a strategic initiative aimed at harnessing blockchain’s potential benefits beyond mere speculative asset trading.

By opening avenues for regulated investment opportunities through established securities platforms like itself—LSE demonstrates a forward-thinking approach towards bridging conventional finance with burgeoning digital asset classes thereby potentially setting new industry benchmarks globally amidst evolving regulatory landscapes surrounding cryptocurrencies and related technologies.

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