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Britain’s financial watchdog has given the greed light for UK exchanges to offer investors crypto-backed exchange-traded notes (ETNs).
The Financial Conduct Authority said on Monday that ETNs would only be available for 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 said are ‘ill-suited for retail consumers due to the harm they pose’.
ETNs are bonds issued by financial institutions tracking the performance of underlying assets – in this case crypto assets.
In a separate statement, the LSE said on Monday 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 be only available for professional investors due to the harm it poses
The FCA’s decision to maintain a ban on sales to every day investors illustrates the tough balance global regulators are trying to strike to ensure consumers are protected.
The regulator added that exchanges ought to ensure trading to be done in an orderly fashion with proper protection for investors, with crypto ETNs meeting all the requirements for UK listings.
Bitcoin continued its recent strength to reach a fresh record high nearing the $72,000 mark on Monday morning, buoyed by market hopes of looming Federal Reserve interest rate cuts.
The world’s biggest cryptocurrency was trading at $71,700 by mid-morning, up 3.1 per cent for the day and more than 60 per cent since the start of the year.
Bitcoin’s momentum also continues to be driven by flows into newly launched US spot Bitcoin ETFs, which have recorded cumulative flows of more than $106billion since the start of the year.
The FCA also said that with greater insight and data from a longer period of trading history, professional investors are now able to better establish whether crypto ETNs meet their risk appetite.
However It warned: ‘The FCA continues to remind people that cryptoassets are high risk and largely unregulated.
‘Those who invest should be prepared to lose all their money.’
