The London Stock Exchange (LSE) plans to list crypto exchange-traded notes (ETNs) by May 28, after a regulatory shift by the Financial Conduct Authority (FCA).
According to reports, the LSE signalled its intent to start accepting proposals for physically backed-bitcoin- and ether-related ETNs, i.e. debt securities that would trade on the exchange during London trading hours.
LSE Lays Out the Next Steps
On Monday, in a notice, the LSE clarified the next steps for those looking to issue such products; according to the notice, bitcoin and ether ETN applications open on April 8. It added that issuers must wait until April 15 to submit such proposals should they want their securities listed by May 28. The LSE chose May 28 to list the ETNs “to enable the maximum number of issuers to be present in the market on the first day of trading.” The statement added issuers will need sufficient time to prepare a “base prospectus” for the FCA to approve.
The statement reads:
“We have decided to launch the market in Crypto ETNs on May 28 2024, to enable the maximum number of issuers to be present in the market on the first day of trading. In choosing this date we have taken into consideration that we need to ensure that issuers meet the requirements for consideration detailed in the Crypto ETN factsheet and importantly, it will also enable those issuers planning on admitting securities on the launch date, time to prepare documentation to establish a Crypto ETN programme which will require a base prospectus to be approved by the FCA.”
Issuers proposing to establish a crypto ETN to list securities on the Main Market on May 28 must submit the following to the LSE by April 15:
- “A letter setting out details of how the issuer and /or the Crypto ETN meets the requirements for consideration detailed in the crypto ETN factsheet, available on the Exchange’s website (https://docs.londonstockexchange.com/sites/default/files/documents/crypto_etn_admission_fac tsheet.pdf), and
- A draft of the base prospectus highlighting where disclosure of matters set out in (a) above is included in the base prospectus.”
The LSE’s “Crypto ETN Admission Factsheet” explains it would only consider physically backed bitcoin and ether ETNs with its assets “wholly or principally held in cold storage.” It added if no such storage exists, the issue must on-board third-party audit reports and secure regulated custodians. The LSE further details that in the event of storage or audit report issues, physically-backed bitcoin and ether must “held by a custodian or custodians that are subject to AML regulation in the United Kingdom, European Union (or European Economic Area, where equivalent laws apply), Jersey, Switzerland or United States.”
The factsheet also details how issuers can submit up to three currency lines for the ETNs:
“Given the nature of the product, and the admission guidance set out in this Factsheet, standard admission timelines do not apply to Crypto ETNs;
Issuers and their advisers should therefore liaise with the Exchange at the earliest opportunity to discuss their proposed admission.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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