Bitcoin, Ethereum ETN to be listed on London Stock Exchange

The United Kingdom is another crypto-friendly development that has decided to merge its traditionally regulated market with cryptocurrencies. Starting on May 28, the London Stock Exchange (LSE) will launch exchange-traded notes (ETNs) for Bitcoin and Ethereum. It is worth noting that these ETNs are only open to professional investors and traders. With this, the UK is once again portraying itself as a lucrative destination for cryptocurrency businesses and investors. The cryptocurrency industry is currently worth $2.6 trillion – establishing it as a new entrepreneurial sector with clear potential that the UK wants to capitalize on.

A London stock exchange says it will accept applications for Bitcoin and Ethereum ETNs from April 8, 2024 Formal market notification Published by the London Stock Exchange on March 25.

What are crypto ETNs?

The British Barclays Bank proposed the concept of ETN as an investment tool as early as 2006. Their goal is to simplify the commodity and currency investment process for retail investors and maximize returns by leveraging the debt and credit system.

ETNs are issued by banks as unsecured debt securities. It tracks an index of securities and its price is tied to the performance of that index. In the case of the London Stock Exchange, those indices will be Bitcoin and Ethereum – both of which are currently surging in price, fueling the ongoing bull run in the cryptocurrency industry.

The ETN issuer pays ETN holders the return of the index over a certain period of time. The investment principal is also returned to the investor when the ETN matures – which can be as long as 10 to 30 years.

ETNs were invented to meet the needs of investors. ETN investors only pay taxes on their investment when they earn a profit.

ETNs are not monitored by a board of directors and carry credit risk. In addition, ETNs are illiquid and may contain holding period risks, during which the index may fluctuate, resulting in losses for investors.

London Stock Exchange’s ETN Roadmap

The UK government has set out some rules for financial institutions wishing to launch ETNs on the London Stock Exchange to follow.

For example, all crypto ETNs must be backed by physical commodities. The LSE said the underlying BTC and ETH assets associated with these ETNs must be provided by a custodian with an anti-money laundering license issued by the United States, United Kingdom or the European Union. Cryptocurrency ETN Admission Fact Sheet By London School of Economics.

“Crypto ETNs enable investors to trade securities tracking crypto assets on exchanges during London trading hours. Crypto ETNs are traded in their own dedicated trading section and through EUI (Euroclear UK & Ireland) or Euroclear Bank and Clear Stream Bank (ICSD ) for settlement,” the London Stock Exchange noted.