The UK's Financial Conduct Authority (FCA) has given the green light to asset manager WisdomTree to list Bitcoin and Ethereum exchange-traded products (ETPs) on the London Stock Exchange (LSE).

These listings, set to begin trading on May 28, will be available exclusively to professional investors.

Regulatory Conditions and Compliance

The FCA’s approval comes with stringent conditions to ensure the integrity and security of the ETPs. 

To be eligible for FCA approval, the ETPs must be denominated in Bitcoin or Ether, be physically backed, and be non-leveraged. 

Additionally, issuers must partner with an Anti-Money Laundering (AML) licensed custodian based in the U.S., the U.K., or the European Union. These custodians must hold the underlying assets in cold storage, providing an extra layer of security.

WisdomTree’s Expansion

WisdomTree's approved ETPs include the Physical Bitcoin (BTCW) and Ethereum (ETHW). Both ETPs will carry fees of 35 basis points, making them accessible yet cost-effective investment vehicles for professional traders. 

This development follows the FCA’s March announcement, which indicated it would not object to Bitcoin ETP listings for professional investors, marking a shift in regulatory attitude.

WisdomTree, headquartered in New York and managing over $111 billion in assets globally, has been a pioneer in offering crypto-related products. 

In the U.S., WisdomTree’s Bitcoin Fund (BTCW) was among the first to be approved as a spot Bitcoin ETF in January. 

Market Impact and Broader Context

Previously, in 2020, the FCA had banned such offerings due to concerns about investor protection and market stability. However, the success of Bitcoin spot ETFs in major markets like the U.S. and Hong Kong has influenced regulators worldwide to reconsider their positions. 

The FCA’s decision also coincides with increasing political support for crypto regulation. The FIT21 Act, led by the U.S. Republican Party, seeks to provide a comprehensive regulatory approach for the larger crypto ecosystem. 

Prominent figures, including Republican candidate and former President Donald Trump, have supported this initiative. 

Despite the positive move for professional investors, the FCA has maintained its cautious stance towards retail investors. The ban on crypto ETPs for retail investors remains in place, reflecting ongoing concerns about cryptocurrency investments' potential risks and volatility.