UK regulator approves crypto exchange-traded notes for qualified investors

UK regulator approves crypto exchange-traded notes for qualified investors
UK regulator approves crypto exchange-traded notes for qualified investors

Britain’s financial watchdog stated that it will soon permit recognized investment exchanges to launch cryptocurrency-backed exchange-traded notes.

Britain’s financial watchdog announced on Monday that it will now allow recognized investment exchanges to launch crypto-backed exchange-traded notes, becoming the latest regulator to approve digital asset trading products.

The Financial Conduct Authority (FCA) stated that these products will only be available to professional investors, such as investment firms and credit institutions that are authorized to operate in financial markets.

However, the FCA has warned that crypto exchange-traded notes (ETNs), which are bonds issued by financial institutions that track the performance of underlying assets, can hurt individual investors.

The FCA stated that exchanges must provide orderly trading and sufficient investor protection, and crypto ETNs must meet all standards for UK listings.

The cryptocurrency market has risen in recent months as regulators around the world have approved digital asset investment products, despite long-standing warnings about the hazards associated with volatile cryptocurrencies like bitcoin.

Bitcoin surpassed $70,400 on Monday, propelled by a surge of investment into spot bitcoin exchange-traded funds permitted by US regulators as well as expectations that the US Federal Reserve may slash interest rates shortly.

The FCA stated that with more information and data from a longer trading history, professional investors can now better determine whether crypto ETNs match their risk tolerance.

The London Stock Exchange announced in a separate statement on Monday that it will accept applications for bitcoin and ether ETN admittance beginning in the second quarter of this year.

The FCA stated that crypto ETNs and derivatives “are ill-suited for retail consumers due to the harm they pose” and that the ban on crypto ETNs and derivatives for retail consumers would continue.

“The FCA continues to caution individuals that cryptoassets are high-risk and mostly unregulated. Those who invest should expect to lose all of their money, it added.

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