The London Stock Exchange (LSE), known for its prestigious blue-chip stocks, is poised to enter the cryptocurrency market with the introduction of Bitcoin and Ethereum exchange-traded notes (ETNs) on May 28. This move was detailed in a recent announcement by the exchange.
This step follows the LSE’s earlier decision to start accepting applications for crypto ETNs in the second quarter of this year.
Beginning April 8, companies can apply to list their Bitcoin and Ethereum ETNs in the LSE’s new market segment.
In preparation for the launch date, issuers are given enough time to fulfill listing requirements and assemble necessary documentation, including a prospectus for review by the Financial Conduct Authority (FCA). The LSE’s goal is to ensure broad participation from issuers on the first day of trading.
Issuers must submit a detailed letter and a preliminary base prospectus by April 15, demonstrating compliance with the guidelines set out in the Crypto ETN factsheet.
The FCA’s approval of these prospectuses is crucial for the ETNs to be listed on both the Main Market and the Official List, as mandated by the LSE.
Issuers who do not meet the necessary criteria or miss the deadlines for submission and approval will not be able to participate in the initial phase of the LSE’s Crypto ETN market.
ETNs, similar to exchange-traded funds (ETFs), offer exposure to various assets but differ structurally. Unlike an ETF, which involves partial ownership of underlying assets, an ETN is akin to a bank-issued unsecured debt note, with proceeds invested in assets tracking a specific index, and its value reflecting the performance of these assets.
According to current FCA rules, the upcoming Bitcoin and Ethereum ETNs will be limited to “professional investors,” such as credit institutions and authorized investment firms, excluding retail investors.
Amid challenges, including a decrease in the number of listed companies and lower trading activity post-crisis, as reported by Bloomberg, the LSE is addressing these issues by tapping into the burgeoning digital asset sector to attract institutional investor interest.
By creating a regulated and secure environment for digital assets, the LSE seeks to draw investments and strengthen the UK’s standing in the digital asset economy.
