Global asset manager WisdomTree has received approval from the Financial Conduct Authority (FCA) to list new investment products related to Bitcoin and Ethereum on the London Stock Exchange (LSE), the company said in a recent press release.
The company has secured regulatory clearance to offer its new cryptocurrency-related products to European professional investors.
The products, scheduled to launch on May 28, include Bitcoin WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW) exchange-traded products (ETPs). These ETPs will initially be exclusively accessible to professional investors in certain sectors.
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Like a Bitcoin exchange-traded fund (ETF), a Bitcoin or Ethereum ETP is an investment vehicle that tracks the prices of both cryptocurrencies. The value of ETP shares directly reflects the price movements of the underlying cryptocurrency.
As mentioned, WisdomTree’s upcoming ETP has a competitive Management Expense Ratio (MER) of 0.35%. This is one of the lowest fee options in Europe for institutional-grade Bitcoin and Ethereum exposure.
WisdomTree is one of the first companies to receive cryptocurrency ETP approval from the FCA. However, this is not WisdomTree’s first cryptocurrency ETP. At the end of 2019, the company introduced its Bitcoin ETP on Switzerland’s main stock exchange.
WisdomTree’s cryptocurrency ETP is currently accessible to professional investors in Austria, Belgium, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, Poland, Netherlands, Norway, Spain, Sweden and Switzerland.
European investors from the countries listed above can trade through recognizable ETP frameworks such as Deutsche Börse Xetra, the Swiss stock exchange SIX and the Euronext exchanges in Paris and Amsterdam, along with accessible routes. WisdomTree currently offers 8 ETPs on various exchanges.
As of January 2024, WisdomTree manages approximately $99.5 billion in assets globally, offering 79 ETFs in the U.S. and 269,349 products in Europe. The company’s ETFs span a variety of asset classes and countries around the world, including U.S. and international stocks, currencies, fixed income and alternatives.
FCA eases stance on cryptocurrency-related derivatives
According to Alexis Marinof, WisdomTree’s Head of Europe, WisdomTree’s FCA-approved ETPs provide a more regulated, convenient and friendly way for professional investors to gain exposure to Bitcoin and other cryptocurrencies. He believes FCA approval could be a catalyst for institutional adoption of cryptocurrencies as regulatory barriers are removed.
“In this regard, FCA approval could broaden institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory restrictions and uncertainty. We anticipate FCA approval of our cryptocurrency ETP prospectus. “We will remove barriers to entry,” he said. Marinov said.
The FCA approval also signals the UK financial watchdog’s new approach to cryptocurrency-related derivatives.
The FCA has banned the sale of cryptocurrency derivatives and exchange-traded notes (ETNs) to retail investors since January 2020. However, the FCA has recently softened its stance and will not oppose requests from financial institutions such as the LSE to list cryptocurrencies. ETP for professional investors.
This change follows the widespread adoption of cryptocurrency ETPs in Europe in recent years. Additionally, the US Securities and Exchange Commission’s (SEC) approval of a spot Bitcoin ETF in January 2024 is one of the key factors. However, due to the risks involved, the FCA believes that crypto ETNs and derivatives are not suitable for retail consumers.
While the FCA’s move is seen as a positive step, the regulator is still under pressure to allow retail access to cryptocurrency ETPs. The industry argues that a blanket ban risks pushing individual investors into riskier direct exposure. However, FCA is unlikely to change its position in the short to medium term.
The US is now focused on the SEC’s decision to file a spot Ethereum ETF. This ruling will not only impact the cryptocurrency industry, but potentially serve as a catalyst for other jurisdictions as well.