First UK crypto ETPs to launch on May 28

Stay informed with free updates

Simply sign up to the myFT Digest of Exchange Traded Funds, delivered straight to your inbox.

Latest news on ETFs

Visit our ETF Center to learn more and explore our in-depth data and comparison tools

The first cryptocurrency exchange-traded products in the UK are set to finally begin trading next week, almost a decade after the first such vehicles appeared in Sweden.

tree of wisdom and 21Shares have received the green light from the Financial Conduct Authority, the City regulator, to list ETPs investing in “physical” bitcoin and spot ether, the two most popular digital tokens, on the London Stock Exchange on May 28.

However, the ETPs – part of a barrage of similar vehicles expected to be listed on the LSE – be reserved for professional investors as the FCA ruled that “crypto derivatives are unsuitable for retail consumers due to the harm they pose”.

This position stands in stark contrast to that of exchanges in much of continental Europe, as well as Australia, Brazil, Canada, Hong Kong and the United States, which offer crypto ETPs to retail investors and institutional.

U.S.-listed spot Bitcoin ETFs already boast combined assets of $50 billion, despite only launching in January, with about 80% held by retail investors, according to regulatory filings .

A series of other crypto ETP managers, including ETC Group and CoinShares, are known to have applied to list vehicles on the LSE, ideally also on May 28 if they receive regulatory approval from the FCA on time.

“The FCA’s approval of the prospectus for our crypto ETPs is an important milestone for the industry and UK-based professional investors looking to gain exposure to this asset class,” said Alexis Marinof, Head Europe at WisdomTree, which manages $111 billion globally.

“While UK-based professional investors have been able to invest in crypto ETPs through overseas exchanges, they will soon have a more convenient access point. The FCA’s approval in this regard could lead to greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to bitcoin and other cryptocurrencies due to the limitations regulatory and uncertainty,” he added.

WisdomTree’s Physical Bitcoin (BTCW) and Physical Ethereum (ETHW) ETPs will have a fee of 0.35%, the same as equivalent vehicles listed on a number of mainland 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%, said: “London is home to one of the deepest and the most liquid 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 in the European cryptocurrency market. The FCA has only approved vehicles that invest in bitcoin and ether and are not leveraged and physically backed.

Despite the ban on retail investors, issuers hope there will be enough interest from UK-based professional investors to make cross-listing their ETPs in London worthwhile.

Recommended

More than 900 institutional investors have acquired stakes in U.S.-listed spot Bitcoin ETFs, according to SEC filings, suggesting there may be an audience even for ETNs that are off-limits to investors individuals.

“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 into this asset class. Multi-asset managers are also interested in this,” said Ravinder Azad, head of UK sales at WisdomTree. The company attracted 14 institutional investors to a UK crypto webinar earlier this year, but has already seen 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 United States, Europe and Greater China, more institutional investors expressed optimism about the outlook for digital assets than for any other asset class over the next 12 months.

However, a crypto ETF issuer that has no plans to list a product in the UK while retail investors remain banned told the FT: “You are launching a product that is not universal. It has to be universal. This is the principle behind ETFs all over the world.

Source