- LSEG says it will start offering ETNs to professional investors from the second quarter
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Britain’s financial watchdog has given greedy UK exchanges the green light to offer investors cryptocurrency-backed exchange-traded notes (ETNs).
The Financial Conduct Authority said on Monday that ETNs would only be available to professional investors, such as investment firms and credit institutions.
It means the regulator will maintain a ban on the retail sale of crypto ETNs and derivatives, which the FCA says are “unsuitable for retail consumers due to the harm they pose.”
ETNs are bonds issued by financial institutions that track the performance of the underlying assets (in this case, crypto assets).
In a separate statement, the LSE said on Monday that it would accept applications for the admission of bitcoin and ether ETNs from the second quarter of this year.
In a statement, the FCA said these products would only be available to professional investors due to the harm they pose.
The FCA’s decision to maintain a ban on sales to everyday investors illustrates the difficult balance that global regulators are trying to strike to ensure consumers are protected.
The regulator added that exchanges must ensure that transactions are carried out in an orderly manner with adequate protection for investors, and that crypto ETNs meet all requirements for listing in the UK.
Bitcoin continued its recent strength to hit a new record high near the $72,000 mark on Monday morning, boosted by market hopes of imminent interest rate cuts from the Federal Reserve.
The world’s largest cryptocurrency was trading at $71,700 at mid-morning, up 3.1 percent on the day and more than 60 percent since the beginning of the year.
Bitcoin’s momentum also continues to be driven by flows into the recently launched US spot Bitcoin ETFs, which have seen cumulative flows of over $106 billion since the start of the year.
The FCA also said that with greater knowledge and data from a longer period of trading history, professional investors can now better establish whether crypto ETNs meet their risk appetite.
However, he warned: ‘The FCA continues to remind people that crypto assets are high risk and largely unregulated.
“Those who invest should be prepared to lose all their money.”