Greenlight: WisdomTree Set to Launch Crypto ETPs on London Stock Exchange

Global asset manager WisdomTree has received a greenlight from the Financial Conduct Authority (FCA) to list its new investment products tied to Bitcoin and Ethereum on the London Stock Exchange (LSE), said the firm in a recent press release.

The firm has secured regulatory permission to bring new crypto-related products to European professional investors.

Set to launch on May 28, these products include Bitcoin WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETHW) exchange-traded products (ETPs). These ETPs will initially be exclusively accessible to professional investors in specific areas.

More Investment Products Are Here

Like Bitcoin exchange-traded funds (ETFs), a Bitcoin or Ethereum ETP is an investment vehicle that tracks the price of either cryptocurrency. An ETP share’s value directly mirrors the underlying cryptocurrency’s price movement.

As noted, WisdomTree’s upcoming ETPs have a competitive management expense ratio (MER) of 0.35%. This makes them one of the lowest fee options in Europe for institutional-grade Bitcoin and Ethereum exposure.

WisdomTree is among the first to get crypto ETP approval from the FCA. However, this will not be WisdomTree’s first crypto ETP. In late 2019, the firm debuted its Bitcoin ETP on Switzerland’s main stock exchange.

WisdomTree’s crypto ETPs are currently accessible to professional investors in Austria, Belgium, Denmark, Finland, France, Germany, Italy, Ireland, Luxembourg, Poland, Netherlands, Norway, Spain, Sweden, and Switzerland.

European investors in the listed countries above, along with an accessible avenue, can trade through a recognizable ETP framework like Deutsche Börse Xetra, the Swiss Stock Exchange SIX, and Euronext exchanges in Paris and Amsterdam. WisdomTree currently offers a range of eight ETPs across various exchanges.

As of January 2024, WisdomTree manages approximately $99.5 billion in assets globally and offers 79 different ETFs in the U.S. and 269,349 products in Europe. The company’s ETFs span various asset classes and countries worldwide, including U.S. and International Equity, Currency, Fixed Income and Alternatives.

FCA Softens Stance on Crypto-Related Derivatives

According to Alexis Marinof, WisdomTree’s Head of Europe, WisdomTree’s ETPs, with FCA approval, offer a more regulated, convenient, and familiar way for professional investors to gain exposure to Bitcoin and other cryptocurrencies. He believes the FCA approval can be a catalyst for greater institutional adoption of cryptocurrencies as regulatory barriers are removed.

“FCA approval in this respect could result in greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty – we would expect FCA approval of our crypto ETPs’ prospectus to remove those barriers to entry,” said Marinof.

The FCA approval also shows a new approach of the UK financial watchdog to crypto-related derivatives products.

The FCA banned the sale of crypto derivatives and exchange-traded notes (ETNs) to retail investors in January 2020. However, the FCA has recently softened its stance and will not object to requests from financial institutions, like the LSE, seeking to list crypto ETPs for professional investors.

This change came after crypto ETPs became widely available in Europe in recent years. In addition, the U.S. Securities and Exchange Commission (SEC) approval of spot bitcoin ETFs in January 2024 is among the key factors. However, due to the risks involved, the FCA believes crypto ETNs and derivatives are ill-suited for retail consumers.

While the FCA’s move is seen as a positive step, the regulator is still under pressure to allow retail access to crypto ETPs. The industry argues that a blanket ban risks pushing retail investors into riskier direct exposure. However, the FCA is unlikely to change its position in the short to medium term.

The US now focuses on the SEC’s spot Ethereum ETF filings decision. The verdict will not only affect the crypto industry but also potentially be a catalyst for other jurisdictions.