Bitcoin
First UK Crypto ETPs to Launch on May 28
Stay informed with free updates
Simply sign up for myFT Digest of exchange-traded funds – delivered straight to your inbox.
Latest news about ETFs
Visit our ETF Center to learn more and explore our in-depth data and comparison tools
The UK’s first cryptocurrency exchange-traded products will finally begin trading next week, almost a decade after the first such vehicles appeared in Sweden.
Tree of Wisdom and 21Shares received the green light from the Financial Conduct Authority, the City’s regulator, to list ETPs that invest in “physical” Bitcoin and Ether, the two most popular digital tokens, on the London Stock Exchange on May 28.
However, ETPs — which are part of a flurry of similar vehicles expected to be listed on the LSE — will will only be available to professional investors because the FCA ruled that “crypto derivatives are unsuitable for retail consumers due to the harm they pose.”
The stance contrasts sharply with stock exchanges in much of continental Europe, as well as Australia, Brazil, Canada, Hong Kong and the US, which offer crypto ETPs to retail and institutional investors.
US-listed bitcoin spot ETFs already have combined assets of $50 billion despite only being launched in January, with about 80% of that held by retail investors, according to regulatory filings.
It is understood that a number of other crypto ETP managers, including ETC Group and CoinShares, have filed to list on the LSE, ideally also on May 28, if they receive regulatory approval from the LSE. FCA in time.
“The FCA’s approval of the prospectus for our crypto ETPs is a significant step forward for the industry and UK-based professional investors seeking exposure to the asset class,” said Alexis Marinof, head of Europe at WisdomTree, which has U.S. $111 billion under management globally.
“While UK-based professional investors have been able to allocate crypto ETPs through overseas exchanges, they will soon have a more convenient access point. FCA approval in this regard could result in greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty,” he added.
WisdomTree’s Physical Bitcoin (BTCW) and Physical Ethereum (ETHW) ETPs will have fees of 0.35 percent, the same as equivalent vehicles listed on several continental European exchanges.
Ophelia Snyder, co-founder of 21 Shares, which will list its existing Bitcoin and Ethereum staking ETPs in the UK, with fees of 1.49 percent, said: “London hosts one of the deepest and most liquid capital markets in the world – where there is proven institutional interest in cryptocurrencies.”
All UK-listed crypto funds will be constructed as exchange-traded notes, a common structure across the European cryptocurrency market. The FCA has only approved vehicles that invest in bitcoin and ether and that are unleveraged and have physical support.
Despite the ban on retail investors, issuers remain hopeful that there will be enough interest among UK-based professional investors to make it worth listing their ETPs in London.
Recommended
More than 900 institutional investors have built stakes in U.S.-listed bitcoin ETFs, SEC filings show, suggesting there may be an audience even for ETNs that are off-limits to retail investors.
“Hedge funds and small family offices have always had an appetite [for crypto ETFs]. Private banks and discretionary fund managers are a little more hesitant, but want to look at this asset class. Multi-asset managers are also looking at this,” said Ravinder Azad, UK head of sales at WisdomTree. The company attracted 14 institutional investors to a crypto webinar in the UK earlier this year, but already had more than 140 registrations for a follow-up event in June, according to Azad.
Brown Brothers Harriman’s 2024 Global ETF Investor Survey, released this week, found that in the US, Europe and Greater China, more institutional investors said they were optimistic about the outlook for digital assets than any other asset class in the US. next 12 months.
However, one crypto ETF issuer that has no plans to list a product in the UK while retail investors remain off limits told the FT: “You are launching a product that is not universal. It needs to be universal. This is the principle underlying ETFs everywhere.”