London Stock Exchange eyes crypto ETN listings in late May

The London Stock Exchange is looking to list crypto exchange traded notes (ETNs) by the end of May following a shift in stance by the Financial Conduct Authority (FCA).

Earlier this month, the exchange had signaled its intent to start accepting proposals for physically backed bitcoin- and ether-related ETNs — debt securities that would trade on the exchange during London trading hours.

The London Stock Exchange on Monday gave more clarity on next steps for those looking to issue such products.

Applications for bitcoin and ether ETNs can be made starting on April 8, the exchange said in a Monday notice. Issuers will have until April 15 to submit such proposals if they want to have the securities listed on May 28, it added.

The exchange chose May 28 for listing crypto ETNs “to enable the maximum number of issuers to be present in the market on the first day of trading.”

Issuers will need some time to prepare a “base prospectus” that will need FCA approval.

The London Stock Exchange has said it would only consider physically backed bitcoin and ether ETNs with its assets “wholly or principally held in cold storage.” If no such storage exists, the issuer will have to gain third-party audit reports and secure regulated custodians.

Movement on the crypto ETN front in the UK marks a milestone of sorts given the previous stringent stance by the region’s regulator.

The FCA had banned the sale, marketing and distribution of crypto ETNs to retail consumers in January 2021. It said in a March 11 statement that it would not object to exchanges listing such ETNs — as long as such products were available only to professional investors.

While the crypto ETN ban remains in place for retail customers, Bittrex Global CEO Oliver Linch called the FCA’s move a “pretty big reversal” for the regulator.

“Given London’s status as a global financial hub, it was always inevitable that the FCA would have to respond at some point to the investors’ demands to access crypto investment products,” Linch told Blockworks. “Crypto products such as [crypto] ETNs are now a vibrant asset class in portfolio management across the EU and US. The UK had to catch up and respond given the depth and breadth of the investment landscape here.”

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