The London Stock Exchange said it will start accepting applications for the admission of exchange traded notes backed by Bitcoin and Ether

The London Stock Exchange said it will start accepting applications for the admission of exchange traded notes backed by Bitcoin and Ether.

Major investors have received a boost for their digital asset arms as the UK markets watchdog announces its willingness to permit exchanges to establish a market for bitcoin-backed exchange-traded notes (ETNs).

The Financial Conduct Authority (FCA) stated that it will "not object to requests" from UK exchanges seeking to create a listing segment for professional investors.

While the FCA has consistently cautioned about the risks of cryptocurrencies for retail investors, it has blocked approximately 85% of crypto firms attempting to establish operations in the UK for failing to demonstrate their ability to prevent money laundering through their platforms.

The FCA outlined several caveats for exchanges seeking to list crypto ETNs. They must adhere to existing prospectus and disclosure rules, and decisions will be made on a case-by-case basis.

However, the decision to allow requests for these products will benefit exchanges aiming to capitalize on digital asset trading revenues, particularly as major banks and asset managers seek to compete with native crypto firms. The London Stock Exchange (LSE) announced that it will permit bitcoin and ether-backed ETNs, with acceptance of applications for admission expected in the second quarter of 2024. Exact launch dates will be confirmed later.

"Given the guidance and views published by the FCA in respect of cryptoassets, the exchange considers that the admission of certain securities representing cryptoassets may be detrimental to the reputation and integrity of the exchange’s markets and/or the exchange," the LSE added in a factsheet. It will, therefore, allow no leveraged products.

Bitcoin prices have surged in recent weeks, exceeding $70,000 on 11 March, recovering from a prolonged dip following FTX's collapse.

"With increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether [crypto] ETNs meet their risk appetite," the FCA said in a note published on its website.