Crypto ETNs Listed on LSE Fail to Gather Inflows Due to Lack of Institutional Interest
Newly listed bitcoin and ethereum exchange-traded notes (ETNs) listed on the London Stock Exchange (LSE), are failing to attract inflows due to the lack of institutional demand, according to crypto ETP providers.
In May, 21Shares launched four new physically-backed crypto exchange-traded notes (ETNs) including the 21Shares Bitcoin ETN, 21Shares Ethereum Staking ETN, 21Shares Bitcoin Core ETN, and the 21Shares Ethereum Core ETN.
WisdomTree listed a Bitcoin and Ethereum ETN in May. Invesco launched the Invesco Physical Bitcoin ETP listed on the LSE earlier this week carrying a total expense ratio of 0.39%.
Crypto ETNs track the performance of underlying assets such as bitcoin or ether and are traded and settled like normal shares.
The new crypto products are restricted to professional investors only, under Financial Conduct Authority (FCA) regulations. Why have the products been slow to gain inflows since listing?
“Pretty simple really. The LSE is very late to the party,” HANetf co-founder and co-CEO Hector McNeil told CryptoNews. Comparing the lack of interest in LSE-listed ETNs and ETPs, McNeil highlights there is plenty of liquidity in markets like Xetra German Electronic Exchange.
The FCA does not allow retail consumers to invest in the products and placed a ban on the sale of crypto derivatives and ETNs in 2021.
“FCA retail ban means no local retail interest to underpin volumes either. Hopefully, it’s a foot in the door with the FCA and they change their approach to be more consistent with ‘complex ETPs’ like leverage ETPs where sophisticated retail can get access. If they did this it would create a deeper and healthy local market,” explains McNeil.
There are several potential reasons why crypto ETNs listed on the London
