🌋 UK Welcomes New Crypto Derivatives
posted 11 Mar 2024
The UK's Financial Conduct Authority (FCA) will start accepting applications for Bitcoin and Ethereum crypto cETNs (Exchange Traded Notes).
These new financial instruments will be exclusively available to professional investors. The FCA's decision is rooted in the belief that institutional investors possess the requisite knowledge and skills to independently evaluate the risks of these financial products. The regulator has highlighted that cETNs and other similar crypto derivatives remain unsuitable for retail investors.
Each application for cETNs will be evaluated individually.
It's essential to distinguish between ETNs and ETFs. ETNs are debt instruments issued by financial institutions, such as banks or funds, which promise to pay holders based on the performance of a specific asset or index to which the note is linked. In contrast to ETFs, ETN holders do not possess the underlying assets and rely on the issuer to achieve returns.
These new financial instruments will be exclusively available to professional investors. The FCA's decision is rooted in the belief that institutional investors possess the requisite knowledge and skills to independently evaluate the risks of these financial products. The regulator has highlighted that cETNs and other similar crypto derivatives remain unsuitable for retail investors.
Each application for cETNs will be evaluated individually.
It's essential to distinguish between ETNs and ETFs. ETNs are debt instruments issued by financial institutions, such as banks or funds, which promise to pay holders based on the performance of a specific asset or index to which the note is linked. In contrast to ETFs, ETN holders do not possess the underlying assets and rely on the issuer to achieve returns.
Learn more about crypto regulation in the UK in our overview.
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