On Monday 11 March 2024, the Financial Conduct Authority ('FCA') updated its position in relation to crypto securities, stating that it would "not object to requests from Recognised Investment Exchanges" to create a UK listed market segment for the listing of cryptoasset-backed Exchange Traded Notes ('cETNs').
The update is made against the backdrop of the regulator's tough stance on cryptoassets and the regular calls from many for cryptoassets to be more heavily regulated. Importantly, the financial products in question would only be available to professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets.
Notably, the FCA's latest stance follows the recent SEC decision to allow Bitcoin Exchange Traded Notes to be traded, a move which has been a contributing factor to the recent hikes in various cryptocurrency values worldwide. As expected, there has been a similar correlation following the FCA's news, with Bitcoin reaching a booming value of £56,749.68 on Monday - an all-time high.
However, the FCA is clear that exchanges will need to "continue to make sure sufficient controls are in place" and cETNs must meet all the requirements of the UK Listing Regime. The regulator also continues to warn that cryptoassets are high risk and largely unregulated and that those wishing to invest "should be prepared to lose all their money".
The London Stock Exchange confirmed, yesterday, that it will accept applications for the admission of Bitcoin and Ethereum ETNs in the second quarter of 2024, but exact dates are to follow in due course.
The FCA has sought to provide reassurance that it is continuing to work with the government to develop the UK's approach to regulating cryptoassets. Advancements in this space are fast-moving; we last commented about the recent movements of UK government, regulators and regulation on 21 February, here.
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