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In the second quarter of 2024, the London Stock Exchange will start accepting applications to sell exchange-traded notes (ETNs) based on Bitcoin and Ethereum, according to a recent announcement. This will be a big step forward for the entire industry.
With this, the cryptocurrency industry will finally come together with the seemingly orderly stock market. So let’s break down what this means and why it’s a big deal for investors, specifically the pros.
Unpacking ETNs
Exchange Traded Notes, or ETNs, are a type of debt security. Think of them as IOUs issued by banks, but they aren’t ordinary IOUs. They’re special because they will allow investors to test and benefit from cryptocurrencies’ value without owning them.
It’s a way to invest in Bitcoin or Ethereum through something that trades on the stock exchange, just like any other stock. But these ETNs are designed with experts in mind, tailored for those who’ve got the know-how and experience in investing.
Playing It Safe While Breaking New Ground
To make sure everything is fair, the London Stock Exchange has set out clear rules. To begin, these Bitcoin and Ethereum ETNs need to be backed by real crypto assets that are kept safely in cold storage. That means real Bitcoin and Ethereum will back up the value of every note.
The London Stock Exchange says that the companies that hold these cryptocurrencies must be top-notch and follow strict rules against money laundering in the UK, EU, Switzerland, or the US. This process is carefully controlled to make sure it is safe and transparent.
This is going to be like opening a wealth box for skilled investors. It takes the best parts of both worlds: the exciting potential for growth of cryptocurrencies and the safety of investing in stocks. Investors can bet on crypto prices during London trading hours by buying these ETNs. They can do so in a way that is regulated and secure.