Bitcoin prices surged on Monday to reach a new all-time high above $72,000 after the UK’s financial watchdog announced a significant development regarding cryptocurrency-linked exchange-traded products.
FCA Allows Listing of Crypto-Backed ETNs
The Financial Conduct Authority (FCA) stated in a notice that it would permit recognized investment exchanges to establish a UK-listed market segment for crypto-backed exchange-traded notes (ETNs) for the first time. This decision marks a milestone for the cryptocurrency market.
Exchanges seeking to list these ETNs must ensure they meet all requirements of the UK’s listings regime, including issuing prospectuses and maintaining proper controls for orderly trading and investor protection, particularly for professional investors.
Bitcoin and Ether Prices Soar
Following the FCA’s announcement, Bitcoin surged over 3% to a peak of $72,211.51, while Ether climbed more than 2% to $4,041.23. However, Bitcoin’s price later slightly decreased to around $71,530.13.
London Stock Exchange to Accept ETN Applications
The London Stock Exchange responded to the FCA‘s statement, confirming that it would accept applications for the admission of Bitcoin and Ether ETNs starting from the second quarter of this year. However, it’s important to note that only professional investors will be allowed to purchase these ETNs.
Continued Caution for Retail Investors
While the FCA’s decision marks a significant step for institutional investment in cryptocurrencies, it maintains its stance on protecting retail investors. The UK currently prohibits retail investors from purchasing crypto-linked ETNs or derivatives, citing high risks associated with these assets.
The FCA emphasized the volatile nature of crypto assets and their largely unregulated status. They issued a warning, stating that individuals who choose to invest should be prepared to potentially lose all their invested funds.
Impact on the Crypto Market
This development in the UK follows similar moves in the US, where regulators recently approved the first-ever spot Bitcoin exchange-traded funds (ETFs). Notably, this approval came for ETFs from major firms such as BlackRock, Fidelity, and Grayscale.
Bitcoin enthusiasts believe that these recent decisions by regulatory bodies will attract more institutional investment into cryptocurrencies, potentially leading to a positive impact on their prices as more substantial funds flow into the market.
FCA’s Decision and Previous Regulation
The FCA’s decision to allow crypto-linked Bitcoin ETNs contrasts with its previous stance. In 2020, the FCA prohibited the sale of crypto-linked ETNs and derivatives to consumers due to the assets’ extreme price volatility and concerns about financial crime in the secondary market.
In conclusion, the FCA’s approval for the listing of crypto-backed ETNs signals a significant shift in the regulatory landscape for cryptocurrencies in the UK, potentially paving the way for increased institutional involvement in the market.