These instruments can be traded starting May 28, as established by the United Kingdom Financial Conduct Authority (FCA).
This Tuesday, May 28, the notes listed on the financial market (ETN) based on bitcoin (BTC) and ether (ETH), a cryptocurrency of the Ethereum network, debut on the London Stock Exchange (LSE).
The inclusion of these products in one of the most important exchanges in the world could attract more investments and contribute to the general maturity of the digital currency ecosystem.
The LSE, founded in 1801, is one of the main global stock exchanges, and has a market capitalization of $4.3 trillion. The launch of ETNs regulated by the Financial Conduct Authority (FCA) marks an important milestone in the integration of these assets into the traditional financial system.
As the organization had announced on March 25, applications for ETNs could be submitted from April 8.
Until the time of publication of this note, the issuers that obtained approval from the FCA were the asset manager WisdomTree Investments and the Swiss firm 21Shares.
Through a press release, Widsom Tree confirmed that it is among the first issuers of financial products (ETPs) backed by 100% physical BTC and ETH, WisdomTree Physical Bitcoin and WisdomTree Physical Ethereum, respectively.
“The FCA’s approval of the prospectus for our cryptocurrency ETPs is an important step forward for the industry and UK-based professional investors seeking exposure to this asset class.”
Alexis Marinof, European Director of WisdomTree
In turn, he analyzed that this “could result in greater institutional adoption of the asset class, as many professional investors have not been able to gain exposure to bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty.” “We would hope that the FCA approval of the prospectus for our crypto ETPs will help remove those barriers to entry,” says the manager.
The document also highlights that these instruments have a management expense index (MER) of 0.35%, which represents one of the lowest fee levels for institutional-level ETPs in Europe.
Once ETPs begin trading, they will only be available to professional investors.
As Criptonoticias already reported, the FCA prohibited the sale of BTC derivatives and other cryptocurrencies to retail consumers. In other words, to individual clients who wish to invest.
What characteristics do ETNs have?
ETNs are a type of ETP that replicates the price of an underlying asset, in this case, it would be that of BTC and ETH. These debt notes are characterized by being freely traded, just like a stock.
As explained in the Cryptopedia (educational section of CriptoNoticias), unlike BTC ETFs, these products have an expiration date which is when they are settled on the stock market. This date cannot be extended and traders only have the right to trade the ETNs within that period. In addition, they are backed by debt acquired by the issuer.
Taking into account that ETNs are debts, they do not have the highest payment priority for financial companies. That is, if the institution declares bankruptcy, investors run the risk of losing all their money. It is for this reason that makes them a risky financial instrument.
