Industry Updates

FCA crypto ban drives first bitcoin listing in UK to Swiss clearing house

ETC Group becomes the first crypto ETP issuer to list a product on a UK exchange

Jamie Gordon

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The UK will welcome its first bitcoin exchange-traded product (ETP) on 7 June as issuers scramble to find new access points to trade their crypto strategies.

From 7 June, Europe’s largest bitcoin ETP, the BTCetc Bitcoin Exchange Traded Cryptocurrency (BTCE), will list on the Aquis Exchange Multilateral Trading Facilities (MTFs) in London and Paris.

Having made its debut on the Deutsche Boerse in June 2020, BTCE has since traded $5.4bn. As well as its upcoming listings on the Aquis MTFs, the ETP joined three other products in listing on Euronext Paris and two other products in listing on Euronext Amsterdam on Monday morning.

BTCE’s entry onto the Aquis Exchange in London represents another milestone for the assimilation of crypto securities into regulated, institutional-grade investment.

Alongside reluctance to accept crypto ETPs by the Securities and Exchange Commission in the US, the product class also suffered a setback from the UK’s Financial Conduct Authority, when the regulator banned the sale of crypto ETNs to UK retail investors in October 2020.

Since then, the FCA and Swedish regulator, the Swedish Financial Supervisory Authority, have issued warnings about the high volatility of crypto products.

Prior to gaining approval for its Aquis listing, BTCE’s parent company, ETC Group, sought entry to the London Stock Exchange, but was rebutted as the LCH Clearnet – the LSE’s clearing house – currently rejects crypto products on its venue.

Applying some creativity, ETC Group, whose CEO Bradley Duke is speaking at ETF Stream's crypto ETPs webinar on 10 June, used BTCE’s listing on the SIX Swiss Exchange to its advantage.

Because the product began trading in Switzerland in January of this year, Aquis MTFs can rely on SIX Exchange clearing, with Swiss securities allowed to trade in London again from February, following a temporary halt as the UK left the EU’s single market.

What remains to be seen is whether the regulatory dance performed by ETC Group shows the way for others to follow suit on Aquis MTFs, or whether a broader shift onto mainstream UK trading venues is afoot.

The latter seems unlikely, given the fragmented nature of European regulation and the fact that German and Swiss regulators have been more accepting of crypto ETPs.

Bitcoin’s volatility over the last month will also not help issuers make further inroads into UK access points, with the crypto having fallen 37.6% in the last 30 days, as at 1 June.

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