In a strategic move aimed at expanding the range of financial products available, the London Stock Exchange (LSE) announced which will begin offering Bitcoin and Ethereum exchange-traded notes (ETNs) from May 28. This announcement signals a significant step towards the inclusion of digital assets on traditional trading platforms, opening up new avenues for professional investors.
From April 8th, interested entities can now submit their applications to list their Bitcoin and Ethereum ETNs in this new LSE market segment. This early period allows issuers to align with listing requirements and organize the documents required for approval, including a detailed prospectus that must be validated by the Financial Conduct Authority (FCA).
The LSE aims to facilitate the participation of a vast number of issuers at launch, setting a deadline of April 15th for the submission of a letter of intent and a draft prospectus, demonstrating compliance with the guidelines established for Crypto ETNs . Only prospects that receive the green light from the FCA will have their ETNs listed, either on the Main Market or the exchange's Official List.
The differentiation between ETFs and ETNs lies in the structure of each. While an ETF functions as a basket of assets of which the investor owns a fraction, an ETN is comparable to unsecured debt issued by a bank, which allocates resources to invest in assets that follow a specific index, reflecting their performance in value. from ETN.
Purchasing an ETF share implies a direct stake in the underlying assets, while purchasing an ETN is equivalent to lending money to the bank in exchange for a promised return based on the performance of the underlying index.
Following FCA guidelines, the upcoming Bitcoin and Ethereum ETNs will be accessible exclusively to “professional investors”, restricting participation to credit institutions and investment firms authorized to operate in the financial markets, excluding retail investors.
This development comes as the LSE seeks to revitalize its position as a leading financial center, after facing a decline in the number of listed companies and a reduction in trading activity, as per featured in a recent Bloomberg report. The adoption of regulated and secure digital assets could be key to attracting more investment and maintaining the UK's relevance in the digital asset economic landscape.
