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The London Stock Exchange (LSE) has approved the listing of the first-ever cryptocurrency exchange-traded products (ETPs) in Europe.
ETPs are financial instruments that track the underlying price of an asset, such as a commodity or security. In this case, the newly approved ETPs will track the price of Bitcoin (BTC) and Ethereum (ETH), allowing investors to gain exposure to these cryptocurrencies through a familiar investment vehicle traded on the stock exchange.
The FCA's approval for these ETPs marks a significant shift in their stance. In January 2020, it imposed a ban on crypto derivatives products, including ETPs. However, with the widespread availability of such products in Europe and the US's move towards spot Bitcoin ETFs, the FCA adjusted its position. It's worth noting that the FCA is keeping the ban in place for retail investors for now.
New York-based asset manager WisdomTree received approval for its WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW) ETPs, and said they will be listed on the LSE at the earliest date possible which is expected to be on Tuesday May 28.
The FCA also approved prospectuses from 21Shares and Invesco for crypto ETPs, according to its website.
"FCA approval in this respect could result in 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 – we would expect FCA approval of our crypto ETPs’ prospectus to remove those barriers to entry," Alexis Marinof, head of Europe, WisdomTree, said in a statement.
WisdomTree has set a fee of 35 basis points for its products, while 21Shares and Invesco have yet to disclose theirs.
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Crypto Regulations in Europe
The regulatory landscape for cryptocurrencies in Europe is constantly evolving. However, unlike the United States, where the SEC has yet to approve a spot Bitcoin ETF, Europe has taken a more progressive approach. The Markets in Crypto-Assets (MiCA) regulation, which is expected to come into effect in 2024, will establish a harmonized framework for crypto-asset regulation across the European Union. This framework aims to provide greater clarity and legal certainty for crypto businesses and investors.
The LSE's approval of Ethereum ETPs stands in contrast to the ongoing wait for a similar decision in the US regarding spot Ethereum ETFs. While the SEC recently greenlit the first spot Bitcoin ETF in early 2024, investors across the Atlantic are now awaiting the regulatory body's verdict on Ethereum.
While the SEC greenlit the first spot Bitcoin ETF in early 2024, investors across the Atlantic are eagerly awaiting the regulatory body's verdict on spot Ethereum ETFs. The regulator has expressed concerns about potential manipulation and volatility within the Ethereum market, leading to delays in approving spot Ethereum ETFs. However, the LSE's move suggests a growing confidence in established institutions' ability to offer regulated exposure to Ethereum, potentially paving the way for similar developments in the US in the near future.
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