Bitcoin & Ethereum ETPs Launch on London Stock Exchange

Bitcoin and Ethereum-based Exchange-Traded Products (ETPs) are set to be launched on the London Stock Exchange (LSE) following approval from the Financial Conduct Authority (FCA) on May 22. WisdomTree’s physical Bitcoin ETP, symbolized as WBTC, and the physical Ethereum ETP, denoted as WETH, will be among the first series of crypto ETPs to be traded in the United Kingdom, with trading anticipated to commence on May 28, as reported by ETF Stream.

These physical ETPs will be exclusively available to professional and institutional investors, as the retail ban on trading cryptocurrencies and the sale of crypto derivatives and ETPs was implemented in January 2021. This listing coincides with the London Stock Exchange’s announcement made nearly two months earlier. Alexis Marinof, who heads Europe at WisdomTree, commented that the FCA’s approval of their crypto ETPs’ prospectus will simplify the process for UK-based professional investors to invest in crypto-backed products. Currently, these investors access crypto ETPs via international exchanges.

In the public announcement issued on March 25, the LSE indicated that applications for the cryptocurrency ETPs were open until April 8. Funds that were accepted will be listed in the subsequent month, contingent on approval from the FCA. According to the guidelines, to secure FCA approval, the crypto ETPs need to be denominated either in Bitcoin (BTC) or Ether (ETH), be physically backed, and non-leveraged. The issuers are required to collaborate with an Anti-Money Laundering licensed custodian located in the United States, the United Kingdom, or the European Union and must hold the underlying assets in cold storage.

The approval of Bitcoin ETFs by the United States Securities and Exchange Commission (SEC) and their ensuing success—witnessing billions flowing into these ETFs weekly—has spurred other governments worldwide to provide crypto accessibility to their investors. Alongside the UK, Hong Kong has also approved the listing of Bitcoin and Ether ETFs. These Hong Kong-based spot cryptocurrency ETFs were seen as a considerable improvement over their U.S. counterparts due to features such as in-kind transfers and denominations in three fiat currencies.

Investors can make instant purchases and redeem ETF units using Bitcoin or Ether. Yet, despite these enhanced accessibility features, the Hong Kong ETFs did not achieve the same success as the US BTC ETFs, managing to attract only $22.5 million on their first day of trading.

The launch of these ETPs on the LSE marks a significant milestone for the UK’s financial market, allowing professional investors to diversify their portfolios with crypto-backed assets. With the rise of cryptocurrency as a viable investment, institutional investors have shown increasing interest in products that offer secure and regulated exposure to digital currencies.

This step may ignite a broader acceptance of cryptocurrency ETPs across European exchanges, paving the way for potential future offerings that might cater to retail investors as well. The successful roll-out and performance of these products will be closely watched by the market, as it could set a precedent for further development in the UK’s crypto investment landscape.

As industry stakeholders anticipate the trading commencement on May 28, this event underscores the growing institutional acceptance of cryptocurrencies as a legitimate asset class. It also reflects the dynamic regulatory environment adapting to the rapid pace of innovation within the financial sector.