Following news that the London Stock Exchange (LSE) will begin accepting cryptocurrency exchange-traded notes, the market price of the largest cryptocurrency by valuation increased to about $72,000 on Monday.
Analysts predict that this will open the door for more people to invest in cryptocurrencies. Following the Securities and Exchange Commission’s approval of these funds’ January launch, investors flocked to U.S.-listed bitcoin exchange-traded funds.
As a result, the cost of Bitcoin and other digital tokens has increased. The Financial Conduct Authority of the United Kingdom announced on Monday that it will permit exchanges to provide institutional investors with comparable products, such as exchange-traded notes backed by cryptocurrencies.
Recent CoinDesk data indicated that the price of bitcoin exceeded $71,800. The London Stock Exchange (LSE) declared that it will begin to accept Bitcoin and Ether cryptocurrency applications and Ether crypto exchange-traded notes (ETNs) in the second quarter of 2024.
On March 11, the exchange confirmed that it would accept applications following the guidelines specified in its crypto ETF fact sheet. However, the exchange did not provide the exact date that it will start accepting applications.
Within the sheet, the exchange said that crypto ETNs should be physically backed and are non-leveraged. It should have a market price or value measure of the underlying asset that’s publicly available and must have BTC or ETH as underlying crypto assets.
The exchange also highlighted that the underlying crypto assets should be “wholly or principally” held in a cold wallet or something similar. In addition, it should be held by a custodian subject to AML laws in the United Kingdom, European Union, Switzerland or the United States.
The exchange defines ETNs as “debt securities which provide exposure to an underlying asset.” Crypto ETNs allow investors to trade securities that track the performance of crypto assets during the exchange’s trading hours.
An ETN is widely considered a soft alternative to exchange-traded funds (ETFs). Unlike ETFs, an ETN is a debt instrument backed by its issuers rather than a pool of assets. ETFs often focus on esoteric debt strategies that do not easily fit into funds.
