The UK’s financial regulator, the Financial Conduct Authority (FCA), has taken a significant step towards embracing cryptocurrency-based investment products.
On May 22, 2024, the FCA granted approval to WisdomTree, a global asset manager, to list its physically-backed Bitcoin and Ethereum exchange-traded products (ETPs) on the prestigious London Stock Exchange (LSE).
TLDR
- The UK Financial Conduct Authority (FCA) has approved WisdomTree’s physically-backed Bitcoin and Ethereum exchange-traded products (ETPs) for listing on the London Stock Exchange (LSE).
- The WisdomTree Physical Bitcoin ETP and WisdomTree Physical Ethereum ETP are expected to start trading on the LSE by May 28, 2024.
- These ETPs will be available exclusively for professional or institutional investors, not retail investors, as per the FCA’s regulations.
- WisdomTree plans to charge a 0.35% management expense ratio for these crypto ETPs.
- Other crypto ETP issuers, such as Invesco Digital Markets, 21Shares, and CoinShares, have also applied for or received approval to list their products on the LSE.
This regulatory green light paves the way for WisdomTree’s WisdomTree Physical Bitcoin ETP and WisdomTree Physical Ethereum ETP to commence trading on the LSE as early as May 28, 2024.
These ETPs are designed to provide professional or institutional investors with direct exposure to the underlying cryptocurrencies, Bitcoin (BTC) and Ethereum (ETH), respectively.
Notably, the FCA’s approval comes with a caveat – these crypto ETPs will be exclusively available to professional or institutional investors, not retail investors.
This decision aligns with the FCA’s stance on protecting retail consumers from the potential risks associated with volatile and unregulated crypto assets.
WisdomTree, a renowned global ETF and ETP sponsor headquartered in New York, plans to charge a 0.35% management expense ratio for its upcoming crypto ETPs in the UK.
This fee structure is in line with industry standards and allows investors to gain exposure to Bitcoin and Ethereum while mitigating the complexities of directly holding and managing these digital assets.
The listing of WisdomTree’s crypto ETPs on the LSE expands the coverage of its crypto-related products into 16 countries across Europe.
Prior to their approval in the UK, WisdomTree’s crypto ETPs were already available on the SIX Swiss Exchange, Deutsche Börse Xetra, and Euronext.
Alexis Marinof, WisdomTree’s Head of Europe, hailed the FCA’s regulatory approval as a
“significant step forward for the industry and UK-based professional investors seeking exposure to the asset class.”
He emphasized that the arrival of crypto ETPs in the country will provide local professional investors with “a more convenient access point” to the crypto market.
WisdomTree is not the only player in the crypto ETP space seeking a foothold in the UK market. Invesco Digital Markets and 21Shares have also received approvals from the FCA for their respective Bitcoin ETPs, with trading expected to commence on May 28.
Other issuers, such as ETC Group and CoinShares, have applied for similar products and are awaiting regulatory approval.
The FCA’s decision to allow crypto ETPs for professional investors marks a shift from its previous stance, which banned such offerings in 2020.
This reversal reflects the steadily growing adoption of regulated crypto investment products among traditional institutions, particularly in major markets like the United States and Hong Kong, which have already approved Bitcoin spot ETFs earlier this year.
While the FCA has maintained its ban on crypto ETPs for retail investors, citing the potential harm they pose to people’s finances, the approval for professional investors signifies a recognition of the growing institutional demand for regulated crypto exposure.
