WisdomTree Set to Launch Bitcoin and Ethereum Investment Products on London Stock Exchange
Key Takeaways:
- WisdomTree has received FCA approval to list its Bitcoin and Ethereum ETPs on the London Stock Exchange.
- The ETPs will initially be accessible to professional investors in specific areas.
- WisdomTree’s crypto ETPs boast a competitive management expense ratio (MER) of 0.35%.
- The FCA’s approval marks a shift in the regulator’s stance on crypto-related derivatives products.
- The launch of crypto ETPs is expected to be a catalyst for greater institutional adoption of cryptocurrencies.
The world of cryptocurrency has just received a significant boost with global asset manager WisdomTree securing regulatory approval from the Financial Conduct Authority (FCA) to list its new investment products tied to Bitcoin and Ethereum on the London Stock Exchange (LSE). This milestone marks a significant step forward for European professional investors seeking exposure to the cryptocurrency market.
What are Crypto ETPs?
For the uninitiated, a Bitcoin or Ethereum Exchange-Traded Product (ETP) is an investment vehicle that tracks the price of either cryptocurrency. The value of an ETP share directly mirrors the underlying cryptocurrency’s price movement, making it an attractive option for investors seeking to diversify their portfolios.
WisdomTree’s Competitive Edge
WisdomTree’s upcoming ETPs boast a competitive management expense ratio (MER) of 0.35%, making them one of the lowest fee options in Europe for institutional-grade Bitcoin and Ethereum exposure. This competitive edge is likely to attract a significant number of professional investors seeking to capitalize on the growing cryptocurrency market.
A Familiar Framework for European Investors
WisdomTree’s crypto ETPs will initially be accessible to professional investors in specific areas, including Austria, Belgium, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, Poland, Netherlands, Norway, Spain, Sweden, and Switzerland. Investors in these countries can trade through a recognizable ETP framework like Deutsche Börse Xetra, the Swiss Stock Exchange SIX, and Euronext exchanges in Paris and Amsterdam.
FCA’s Shift in Stance on Crypto-Related Derivatives
The FCA’s approval of WisdomTree’s crypto ETPs marks a significant shift in the UK financial watchdog’s stance on crypto-related derivatives products. In January 2020, the FCA banned the sale of crypto derivatives and exchange-traded notes (ETNs) to retail investors. However, the regulator has recently softened its stance, paving the way for financial institutions like the LSE to list crypto ETPs for professional investors.
A Catalyst for Greater Institutional Adoption
According to Alexis Marinof, WisdomTree’s Head of Europe, the FCA approval can be a catalyst for greater institutional adoption of cryptocurrencies as regulatory barriers are removed. „FCA approval in this respect could result in greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty – we would expect FCA approval of our crypto ETPs‘ prospectus to remove those barriers to entry,“ said Marinof.
The Future of Crypto ETPs
While the FCA’s move is seen as a positive step, the regulator is still under pressure to allow retail access to crypto ETPs. The industry argues that a blanket ban risks pushing retail investors into riskier direct exposure. However, the FCA is unlikely to change its position in the short to medium term. The focus now shifts to the US, where the Securities and Exchange Commission (SEC) is set to decide on spot Ethereum ETF filings. The verdict will not only affect the crypto industry but also potentially be a catalyst for other jurisdictions.
Conclusion
WisdomTree’s launch of crypto ETPs on the London Stock Exchange marks a significant milestone in the evolution of the cryptocurrency market. With the FCA’s approval, professional investors in Europe now have a more regulated, convenient, and familiar way to gain exposure to Bitcoin and other cryptocurrencies. As the crypto market continues to grow, it will be interesting to see how regulators and financial institutions respond to the changing landscape.