New York-based WisdomTree has received approval to list physically-backed Bitcoin (BTCW) and Ethereum (ETHW) Exchange-Traded Products (ETPs), with trading expected to commence on May 28. Zurich-based 21Shares also gained approval for its Bitcoin (BTC) and Ethereum (ETH) products, likely launching around the same time. While Invesco's prospectus was approved, the company hasn't yet commented on its plans.
Regulatory Milestones
- The UK's Financial Conduct Authority (FCA) softened its stance in March, allowing Recognised Investment Exchanges (RIEs) to create dedicated market segments for crypto-backed Exchange-Traded Notes (cETNs).
- The London Stock Exchange (LSE) confirmed it would accept Bitcoin and Ethereum ETP applications in Q2 2024 – but exclusively for professional investors.
- This follows the US SEC's January 2024 approval of spot Bitcoin ETFs and Europe's years-long history of crypto ETP trading.
Key Differences in UK Market
Unlike US/European products:
- 📌 Professional investors only: Retail participation remains banned under the FCA's 2020 crypto derivatives prohibition.
- 📌 Physical backing required: Each ETN must hold actual cryptocurrency reserves with transparent pricing.
- 📌 Fee structures: WisdomTree charges 35 basis points; 21Shares hasn't disclosed fees.
Admission Criteria for LSE Crypto ETNs
Proposals must meet these standards:
- Physical asset backing with verifiable reserves
- Transparent pricing mechanism for underlying assets
- Professional investor safeguards (KYC/AML compliance)
👉 Explore crypto investment opportunities
FAQs
Q: Can UK retail investors buy these ETPs?
A: No – the FCA restricts participation to professional investors only.
Q: How do these differ from US spot ETFs?
A: They're structured as ETNs (debt instruments) rather than ETFs, and lack the liquidity of US products.
Q: What cryptocurrencies are supported?
A: Initially Bitcoin and Ethereum, mirroring US/European offerings.
Q: Why the LSE's delayed entry?
A: The FCA maintained strict derivatives bans until institutional demand and global approvals prompted reconsideration.