Huge UK crypto changes for Bitcoin and Ethereum but it comes with a warning
The resurgence of cryptocurrency in the UK has seen the digital currency hit another landmark in big news for British investors. But it comes alongside a warning from the country's finance regulator.
This morning (11 March) Bitcoin hit a new high of more than $71,000 (£55,266), which was up on the previous high of £69,000 (£53,709) in November 2021.
It is welcome news for crypto investors, who saw more than £410 billion (£319 billion) wiped off the largely unregulated market back in 2021.
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It was a period in which Bitcoin saw a drop of 10.3%; Ethereum 14.5%; Cardano 17%; and Ripple 22%.
But the news is good for the first two forms of crypto mentioned above, with Bitcoin and Ethereum now a legitimate form of financial backing on one massive UK market.
Announced this morning, the London Stock Exchange filed a notice stating that it will 'accept applications for the admission of Bitcoin and Ethereum crypto ETNs in the second quarter of 2024'.
ETNs are debt securities which provide exposure to an underlying asset. They are similar to bonds but don't pay interest payments.
The exact launch date will be confirmed in due course, but it can't be far off given we're already in March of 2024.
Rules issued by the stock exchange state that the crypto must be stored 'wholly or principally' in something called a 'cold wallet', which is a virtual wallet that protects the asset from hackers.
Further regulations have been issued regarding money laundering so as to adhere to UK, EU, and US law.
It comes as the Financial Conduct Authority has announced it would 'not object' to investment exchanges creating a market segment based in the United Kingdom for crypto asset-backed exchange traded notes [cETNs] - in other words, a financial product that can be traded like like stocks and shares.
But the FCA said it wouldn't allow this for the public or retail investors due to risks, leaving the market somewhat limited.
In a statement, the FCA said: "The FCA continues to remind people that crypto-assets are high risk and largely unregulated.
"Those who invest should be prepared to lose all their money.
"The FCA is collaborating with government, international partners and industry to develop the UK’s crypto-asset regulatory regime and lead international standards in this space."
On the risk of crypto investing, the FCA adds: "Compared to markets like shares or forex, crypto is still in its infancy. In a developing market with lots of short-term speculative trading and prices particularly susceptible to news and events, the risk of being caught out by a big price move is very real.
"Although the advanced encryption that secures cryptos themselves is difficult to breach, crypto is still vulnerable to cyber-attacks.
"Hackers have successfully stolen from crypto exchanges, and despite pledges by some exchanges to try to recover funds, this isn’t always possible, and many investors have been hit hard, losing a lot of money.
"As with other kinds of high risk investments, anybody thinking about buying crypto-assets needs to fully understand all the risks as well as the opportunities involved. It is important not to throw everything you have into one investment opportunity. Learn more about diversification here."
Topics: Cryptocurrency, UK News, Money, Bitcoin
Tom Earnshaw