Bitcoin surged to a new peak above $72,000 on Monday, driven by news from the British financial watchdog signaling a groundbreaking shift in its stance towards cryptocurrency-linked exchange-traded products.
In a statement released on Monday, the Financial Conduct Authority (FCA) announced its willingness to permit recognized investment exchanges to introduce a dedicated market segment for crypto-backed exchange-traded notes (ETNs) in the UK. However, exchanges must ensure stringent controls are in place to ensure orderly trading and safeguard professional investors. Compliance with the UK’s listing regime, including issuing prospectuses and maintaining ongoing disclosures, is mandatory.
Following the FCA’s announcement, Bitcoin’s price experienced a notable 3% surge, reaching $72,211.51, a fresh all-time high, before slightly retreating to below $71,530.13 by 7:15 a.m. ET. Additionally, Ether rose by over 2%, hitting $4,041.23.
Acknowledging the FCA’s decision, the London Stock Exchange announced it would entertain applications for the admission of bitcoin and ether ETNs starting from the second quarter of the year.
It’s important to note that only professional investors will have access to these ETNs, as the FCA continues to uphold its ban on retail investors purchasing crypto-linked ETNs or derivatives due to perceived risks.
Emphasizing the high-risk nature of cryptoassets, the FCA reiterated its stance on the unsuitability of crypto ETNs and derivatives for retail consumers, urging caution and highlighting the potential for total loss of investment.
This regulatory shift in the UK follows similar moves in the US, where regulators approved the launch of spot bitcoin exchange-traded funds by major firms like BlackRock, Fidelity, and Grayscale. Unlike ETFs, which hold assets, ETNs are unsecured debt securities tied to a market index or benchmark, promising to pay out the index’s full value at maturity, minus management fees.
Bitcoin advocates view these developments as catalysts for increased institutional investment in cryptocurrencies, anticipating a positive impact on prices as more significant capital flows into the market.
The FCA’s decision marks a reversal from its previous stance, having banned the sale of crypto-linked ETNs and derivatives to consumers in 2020, citing concerns over extreme price volatility and financial crime risks.
