UK regulator to allow crypto exchange-traded notes for professional investors

BRITAIN’S monetary watchdog mentioned on Monday (Mar 11) it’ll now allow recognised funding exchanges to launch crypto-backed exchange-traded notes, the newest regulator to pave the best way for digital asset buying and selling merchandise.

These merchandise could be solely obtainable for skilled buyers resembling funding corporations and credit score establishments authorised to function in monetary markets, the Financial Conduct Authority (FCA) mentioned in a press release.

However, the FCA warned that crypto trade traded notes (ETNs) – bonds issued by monetary establishments that observe the efficiency of underlying belongings – pose hurt to retail buyers.

Exchanges should guarantee orderly buying and selling and correct safety for buyers, the FCA mentioned, with crypto ETNs assembly all the necessities for UK listings.

The crypto market has surged in current months as regulators globally – which have lengthy warned of the dangers from risky cryptocurrencies resembling bitcoin – approve digital asset funding merchandise.

Bitcoin hit a file above US$70,400 on Monday, boosted by a flood of money into spot bitcoin exchange-traded funds authorized by US regulators, and hopes the US Federal Reserve will quickly minimize rates of interest.

The FCA mentioned that with better perception and knowledge from an extended interval of buying and selling historical past, skilled buyers at the moment are in a position to higher set up whether or not crypto ETNs meet their threat urge for food.

The London Stock Exchange mentioned in a separate assertion on Monday that it will settle for purposes for the admission of bitcoin and ether ETNs from the second quarter of this yr.

The FCA mentioned that crypto ETNs – in addition to derivatives – “are ill-suited for retail consumers due to the harm they pose,” including that the ban on crypto ETNs and crypto derivatives for retail customers would stay.

“The FCA continues to remind people that crypto assets are high risk and largely unregulated. Those who invest should be prepared to lose all their money,” it added. REUTERS