UK Regulator Allows Crypto-Related Securities

Stay informed with free updates

Simply sign up to the myFT Digest on UK financial regulation – delivered straight to your inbox.

Britain’s financial regulator will allow some bitcoin-related securities to list on stock exchanges, softening its hardline stance on digital assets as investors around the world buy funds investing directly in cryptocurrencies.

The Financial Conduct Authority said on Monday it would “not object” to the creation of exchange-traded notes backed by Bitcoin and Ethereum for professional investors.

Issuers may request to list ratings related to the bitcoin and Ethereum coins on the London Stock Exchange starting in April. ETNs are debt securities that track an underlying asset but are traded and settled through a central market entity such as an exchange and securities depository.

The news helped push Bitcoin and Ethereum higher. Bitcoin, the world’s largest cryptocurrency, hit $72,000 for the first time, while Ethereum touched $4,000 for the first time since December 2021.

The UK has become one of the last major markets to resist trading in crypto-related securities, even as the government has championed the country as a potential hub for digital asset markets.

In 2021, the FCA banned crypto-related derivatives, which included exchange-traded products, due to concerns about the amount of leverage or borrowing available to consumers. Some operators offered up to 100 times leverage on Bitcoin.

The ban – which also covered unleveraged securities – sparked strong criticism from members of the crypto industry, who argue that the UK cannot become a leading market for cryptocurrencies. digital assets unless retail investors have regulated and easy routes to popular tokens such as bitcoin.

“Bitcoin is by far the most well-known crypto asset, and if it is very difficult for the UK public to be able to purchase it, how can we claim to be a crypto hub if we only offer risky ways to purchase this active. ?” said Tim Lowe, strategic advisor at London-based institutional staking firm Attestant.

Regulators in other major markets are increasingly comfortable with investors purchasing securities linked to cryptocurrencies, provided the securities are part of a regulated product.

Recommended

Earlier this year, the United States approved spot bitcoin ETFs, as did EU countries, Australia and Canada. Hong Kong also indicated that it would approve ETNs. The group of newly approved spot bitcoin ETFs in the United States, including those issued by BlackRock and Fidelity, have collectively raised $10 billion since their launch in January, according to crypto investment group CoinShares.

“With increased information and data due to a longer period of trading history, the FCA believes that exchanges and professional investors should now be able to better determine whether crypto-ETNs meet their appetite for risk,” the regulator said in a statement.

He continues to believe “that crypto derivatives are unsuitable for retail consumers because of the harm they pose.” As a result, the ban on the sale of ETNs. . . to retail consumers remains in place.

The LSE said the securities behind the ETNs could not be mined. They must be held in an offline storage vault and held by custodians subject to anti-money laundering rules in the UK, EU, Jersey, US and Switzerland.

Video: Bitcoin mines could be used for energy storage | FT technology


Fuente