According to Blockworks, the UK is preparing to launch physically backed crypto products following approval from the Financial Conduct Authority (FCA). WisdomTree, a fund group, announced that the FCA has approved their proposed bitcoin and ether ETP. The asset manager plans to list these two products on the London Stock Exchange (LSE) on May 28, making it one of the first issuers to gain such approval.
The FCA's approval of these products does not come as a surprise, given its previous statement in March that it would not object to exchanges listing such exchange-traded notes (ETNs), provided they are only available to professional investors. This marked a significant shift for the UK regulator, which had banned the sale, marketing, and distribution of crypto ETNs to retail consumers in January 2021.
Following the FCA's statement, the LSE expressed its intention to start accepting proposals for bitcoin- and ether-related ETNs. These debt securities must be physically backed bitcoin and ether ETNs with their assets primarily held in cold storage. WisdomTree's products are 100% physically backed and will only be available to professional investors.
Alexis Marinof, WisdomTree’s head of Europe, stated that these products would provide a more convenient access point for UK-based investors who have traditionally allocated to crypto ETPs through overseas exchanges. WisdomTree, which manages approximately $106 billion in assets, currently has crypto ETPs listed on the Deutsche Börse Xetra, the Swiss Stock Exchange SIX, and on Euronext exchanges in Paris and Amsterdam.
Marinof added that FCA approval could lead to greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty. He expects the FCA approval of their crypto ETPs’ prospectus to remove these barriers to entry. This news follows the firm's launch of a spot bitcoin ETF in the US in January.