Bitcoin and Ethereum ETNs admitted to London Stock Exchange

The Financial Conduct Authority (FCA) has granted the first authorization for Bitcoin and Ethereum ETNs on the London Stock Exchange. The WisdomTree Physical Bitcoin ETP (WBTC) and the WisdomTree Physical Ethereum ETP (WETH) are expected to celebrate their first day of trading on Tuesday next week.

At the end of March, the London Stock Exchange (LSE) announced in a market notice that investment products based on Bitcoin and Ethereum are expected to be tradable from May 28 - Blocktrainer.de reported. However, official approval from the FCA was still pending at the time. Now that the FCA has given the green light to the Bitcoin and Ethereum ETNs from asset manager WisdomTree, the imminent start of trading is a done deal.

WisdomTree's approved Bitcoin and Ethereum ETNs will charge a management fee of 0.35 percent.

However, the new investment products will only be available for purchase by professional investors. The ban on the sale of derivatives on cryptocurrencies to retail investors, which came into force on January 6, 2021, is still in force on the island.

The FCA's approval of our crypto ETPs is a significant step forward for the industry and UK-based professional investors seeking exposure to the asset class.

While UK-based professional investors have previously been able to invest in crypto ETPs via overseas exchanges, they will soon have more convenient access.
_{Alexis Marinof, Head of Europe at WisdomTree}

A physically backed ETN, like a spot ETF, tracks the value of the underlying asset. Both investment products belong to the upper category of ETPs. The difference, however, is that ETF holders have a claim to ownership of the asset, whereas an ETN is a bond issued by the issuer. In the event of the issuer's insolvency, there would therefore be a risk with an ETN that the investor would come away empty-handed.

Physically collateralized Bitcoin investment products, ETNs and ETCs, have been tradable in the EU for years. Due to the UCITS Directive, ETFs may not only contain one asset. However, these investment products also manage to reflect the price of Bitcoin virtually one-to-one, as they are backed by the asset.

The LSE is one of the largest stock exchanges in the world and the fact that investment products backed by Bitcoin and Ethereum can be traded on it is another milestone in the institutional adoption of Bitcoin.

In the US, the approval of Bitcoin spot ETFs was a huge success and has since boosted the Bitcoin price significantly. Since the first day of trading on January 11, the investment products have seen a net inflow of over USD 13 billion. However, the new ETNs on the London Stock Exchange are not expected to have such an impact on the Bitcoin market.

The LSE is smaller than the Hong Kong stock exchange, where Bitcoin and Ethereum spot ETFs have been tradable since the end of April. In Hong Kong, the investment products have so far attracted less than USD 300 million, which has limited the positive impact on the Bitcoin price.

In addition, institutional investors from the UK have already been able to invest in Bitcoin and Ethereum ETFs via other European exchanges. However, it remains to be seen how much capital will ultimately flow into the new investment products on the London Stock Exchange.