London Stock Exchange to Launch Bitcoin and Ethereum Notes, Excludes Retail Investors

London Stock Exchange will start accepting applications for Bitcoin and Ethereum Exchange Traded Notes (ETN) in Q2 of this year—the launch date has not yet been announced.
The ETNs will be subject to several approval criteria and even if met, the LSE says it still reserves the right to deny listing.
Access to the ETNs will be limited to professional investors only.

Yeah Baby!

The London Stock Exchange (LSE) yesterday announced it will begin accepting applications for Bitcoin and Ethereum-backed Exchange Traded Notes (ETNs) in Q2 of 2024. The launch date for any approved ETNs has not yet been announced, with the exchange saying it “will be confirmed in due course.”

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The ETNs will be subject to some stringent acceptance criteria and will only be available to professional investors, but the announcement is nonetheless a bullish sign for crypto and another significant milestone on the path towards mainstream acceptance.

What Exactly Is An ETN?

We’ve all been hearing a lot about ETFs lately, but what are ETNs? ETNs are a type of unsecured debt security that tracks an underlying security or index. They’re similar to bonds because you’re paid returns when the note matures—but unlike bonds they don’t pay periodic interest payments.

Unlike ETFs, the financial institution issuing an ETN does not typically own the underlying asset, they simply agree to pay the return that the underlying asset potentially produces.

How Will The ETN Applications Work?

According to the LSE’s Crypto ETN Admission Factsheet, any ETN applications will have to meet several criteria to even be considered for approval—and even if these criteria are met the LSE still reserves the right to refuse the applications.

The most important criteria include:

Only Bitcoin and Ethereum ETNs will be considered, no other crypto is eligible at this time.
The ETNs must be non-leveraged, that is, they must be physically backed by the underlying asset—which is different from a typical ETN.
The underlying assets must also be kept primarily in cold-storage with access to cold-staking and they must also be held by a custodian that is subject to anti-money laundering legislation.
The ETNs will only be made available to professional investors. Regular retail investors will not be able to buy or trade these products.

Do I Make You Bullish, Baby?

Despite being limited to professional investors, this move to list crypto-backed ETNs on the London Stock Exchange—an exchange which does over US$200 billion (AUD$302 billion) in trading volume per month—is still significant for crypto.

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The potential approval of crypto-backed ETNs indicates there’s a growing interest from institutions and professional investors to gain exposure to Bitcoin and Ethereum and it continues the growing narrative of mainstream adoption, which is fuelling much of the price action and enthusiasm for crypto this bull run.

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