The London Stock Exchange (LSE) is poised to welcome its first-ever cryptocurrency exchange-traded products (ETPs), following the green light from the UK’s Financial Conduct Authority (FCA) on May 22. Set to debut on May 28, the WisdomTree Physical Bitcoin ETP and the WisdomTree Physical Ethereum ETP mark a significant milestone for the UK market, with ETF Stream reporting the imminent launch.
However, these ETPs will have limitations, as retail clients are barred from trading cryptocurrency derivatives since 2021. Consequently, only professional and institutional investors will have access to these products. The approval from the FCA represents a breakthrough for WisdomTree, enabling professional investors in the UK to tap into crypto-backed products more easily.
Alexis Marinof, head of Europe at WisdomTree, highlighted the importance of the FCA’s approval, noting that it streamlines access to crypto ETPs for UK investors who currently navigate overseas exchanges for such investments. The London Stock Exchange had announced the acceptance of applications for cryptocurrency ETPs until April 8, with the anticipation of listing them in May, contingent upon regulatory approval.
To secure FCA approval, crypto ETPs must adhere to strict criteria, including denomination exclusively in Bitcoin or Ethereum, physical backing, and a prohibition on leverage. Additionally, issuers must collaborate with an anti-money laundering licensed custodian from the US, UK, or EU and store the underlying assets in cold storage. This regulatory framework aims to safeguard investors and maintain the integrity of the market.
The global trend towards offering cryptocurrency services to investors has gained momentum following the success of the US spot Bitcoin ETF approved by the Securities and Exchange Commission (SEC). Similarly, Hong Kong has greenlit the listing of spot Bitcoin and Ethereum ETFs, albeit with distinct features such as physical transferability and denomination in multiple fiat currencies. However, despite this increased accessibility, these ETFs have yet to replicate the impact of their US counterpart, underscoring the unique dynamics of different markets.
