The Financial Conduct Authority (FCA) of the UK has approved Bitcoin and Ethereum-based Exchange Traded Products (ETPs) for listing on the London Stock Exchange (LSE). As reported by ETF Stream, WisdomTree's physically backed Bitcoin ETP (ticker: WBTC) and Ethereum ETP (WETH) will be the first cryptocurrency ETPs to launch in the UK, with trading expected to commence on May 28.
Key Features of the Approved ETPs
- Target Audience: Due to the retail ban on cryptocurrency trading and derivatives enacted in January 2021, these ETPs will only be available to professional and institutional investors.
- Structure: The ETPs must be physically backed, non-leveraged, and denominated exclusively in Bitcoin (BTC) or Ethereum (ETH).
- Custodial Requirements: Issuers are required to partner with AML-licensed custodians in the US, UK, or EU and store underlying assets in cold storage.
Market Context and Global Trends
The approval follows the successful launch of Bitcoin ETFs in the US, which have seen billions in weekly inflows. This has prompted other regions, including the UK and Hong Kong, to explore similar offerings.
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Comparison with Hong Kong's ETFs
Hong Kong recently approved spot Bitcoin and Ethereum ETFs, which offer features like in-kind transfers and multi-currency denominated trading. Despite these advantages, they attracted only $22.5 million on their first trading day—a fraction of the US ETFs' volume.
FAQs
1. Who can invest in these ETPs?
Only professional and institutional investors in the UK, as retail access to crypto derivatives remains restricted.
2. What are the custodial safeguards?
Assets must be held with regulated custodians in cold storage to ensure security and compliance.
3. How do these ETPs differ from US ETFs?
They are physically backed and limited to BTC/ETH, unlike synthetic or leveraged products available elsewhere.
4. Why did Hong Kong's ETFs underperform?
Market size and regulatory timing likely contributed to lower initial demand compared to the US.
Future Outlook
The FCA's move signals growing institutional acceptance of crypto assets, though retail participation remains limited. Analysts expect further ETP approvals as global markets evolve.
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