Internet's Preferred Digital Currency: Bitcoin Now Serves as Its Reserve Asset
In a significant move for the UK's crypto industry, the Financial Conduct Authority (FCA) has decided to lift the ban on crypto exchange-traded notes (ETNs) for retail investors. This shift in approach, announced in June 2023, marks a rebalancing of the FCA's stance towards risk.
The decision comes as the UK has been recognised as an overly cautious outlier in regards to Bitcoin, a digital asset that has inspired innovations such as stablecoins, non-fungible tokens, and decentralized finance (DEFI). Bitcoin, often considered the de facto reserve asset of the internet, also has a high correlation with technology stocks.
From October 8, 2023, Bitcoin ETNs will be listed on the London Stock Exchange for UK retail investors. However, these will now be listed in a new segment dedicated to professional investors only. The company distributing these ETNs is Valour Digital Securities Limited, a subsidiary of DeFi Technologies.
It's important to note that crypto assets, including Bitcoin, remain high risk and largely unregulated. The FCA has reiterated this, urging investors to be prepared to lose all their money.
The success of Bitcoin ETNs in other markets, such as the US, is a testament to their potential. In January 2024, Bitcoin exchange-traded funds (ETFs) were approved in the US and have since grown into substantial products. The iShares Bitcoin Trust, for instance, has grown into an $88 billion product.
The FCA's decision allows UK retail investors to make their own choice about whether a high-risk investment in crypto ETNs is right for them. As London, a major financial centre, could become irrelevant if innovative financial products are banned, risky or otherwise, this move is a step towards maintaining its relevance in the evolving financial landscape.
For those seeking expert insight into the crypto market, ByteTree offers a subscription to its website, providing exclusive early access to news, opinion, and analysis from its team of financial experts, including its CEO and founder, Charlie Morris, who offers investment research for private clients.
As the crypto industry continues to grow and evolve, the lifting of the ban on Bitcoin ETNs is a significant milestone for UK retail investors and the industry as a whole. It's a clear indication that the FCA is committed to supporting the growth of the UK's crypto industry and recognises its potential as a valuable asset class.
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