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London launch of Bitcoin ETP undermines regulatory tension

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  • Regulators plan to launch the first crypto backed derivative product in the UK via ETC Group’s Bitcoin ETP
  • To be listed via Aquis exchange after the Group was rejected from LSE’s clearing house 
  • Regulations in the UK have been mild with respect to cryptocurrencies and the companies that trade or deal in them

Digital currencies are now common among masses and investors are looking to cash in on the hype surrounding them. London, the financial hub of the world, has regulated the derivatives crypto market as the Financial Conduct Authority claims it to be similar to gambling. ETC Group’s Bitcoin related exchange traded product will soon make its way to the UK under norms that govern the Swiss cryptocurrency market. Regulations in the financial hub have dampened spirits as chief executive of ETC Group, Bradley Duke, stated that they were rejected from London Stock Exchanges’ clearing house. 

Exchange Traded Products (ETP) in cryptocurrency now viable for all 

An exchange traded product in cryptocurrency tracks the price of a digital currency after receiving necessary approvals from the regulator. Switzerland has user-friendly cryptocurrency norms that protect investors and policymakers likewise from illicit activities at the behest of scammers. Moreover, it will attract more innovation and lead to growth of all digital assets across various platforms. 

Swiss securities were re-allowed to trade in the UK market from February this year. ETC Group’s Bitcoin ETP is already listed in Switzerland and Aquis exchange will clear the product for listing in the UK. It will be the first listed derivative product to track the price of a cryptocurrency in the country.  

Regulations in London are in mild form  

In recent times, more than 50 companies have been rejected by the Financial Conduct Authority to set up registered cryptocurrency businesses in the UK. The authority cited low standards and poor investor protection as the major concerns for their existence. Several cryptocurrency businesses are planning to set up base in Switzerland as regulators in the UK are apprehensive about the future of digital currencies. 

The UK has joined the list of countries that are expediting regulatory curbs on cryptocurrencies and the way their derivatives function in security markets. However, regulators are far more strict in Paris than the UK, wherein the former has imposed closure of bank accounts if dealings in cryptocurrencies are identified. Furthermore, insurance is a herculean task for a cryptocurrency business in Paris.   

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