London Stock Exchange to debut Bitcoin and Ether ETNs in May

The London Stock Exchange (LSE) announced plans to launch a market for Bitcoin (BTC) and Ether (ETH) exchange-traded notes (ETNs) on May 28.

The exchange will start accepting applications for trading crypto ETNs from April 8, pending approval from the UK’s Financial Conduct Authority (FCA).

ETNs, which operate similarly to exchange-traded funds (ETFs) but function more like unsecured debt notes, will be made available exclusively to professional investors.

This development follows the FCA’s statement earlier in March, indicating it would not reject applications from recognized investment exchanges to list ETN market segments.

In the US, the Nasdaq-listed spot Bitcoin ETFs recorded inflows of $15.4 million on Monday, marking an end to a five-day streak of outflows. Fidelity’s FBTC led the inflows with $261.8 million, followed by BlackRock’s IBIT with $35.5 million, among others. In contrast, Grayscale’s ETF (GBTC) continued to experience outflows, shedding over $350 million last week.

The conditions for admission to the LSE for Crypto ETNs include several key criteria outlined in a factsheet published by the exchange. Firstly, the proposed Crypto ETN must be physically backed and have a reliable and publicly available market price or value measure of the underlying Bitcoin or Ethereum assets.

“Exchanges will need to continue to ensure sufficient controls are in place, so trading is orderly and proper protection is afforded to professional investors. ETNs must meet all the requirements of the UK Listing Regime, for example on prospectuses and on-going disclosure,” the statement reads.

Additionally, the underlying cryptoassets must be held in ‘cold storage’ or equivalent arrangements and be held by a custodian subject to anti-money laundering (AML) regulation in specific jurisdictions, including the UK, EU (or EEA), Jersey, Switzerland, or the US.

Furthermore, the LSE specifies that crypto ETNs admitted to trading are only appropriate for professional investors and are available under trading segments designated as “Professional investors only.”

The Financial Conduct Authority (FCA) stated that it will not object to requests from Recognised Investment Exchanges (RIEs) to establish a UK-listed market segment for crypto asset-backed Exchange Traded Notes (cETNs).