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- A Bitcoin Exchange Traded Product will provide investors exposure to a volatile digital currency with commendable returns
- The product will be launched in Aquis exchange after the FCA provides a suitable entry route
- Crypto ETPs by 21Shares already listed in Paris and Amsterdam exchanges
Investors will now be able to take suitable positions in trading Bitcoin in the UK with the approval of a number of exchange traded products. The derivative products allow fund managers to speculate or hedge their investment risk.
In January, the Financial Conduct Authority had issued a notice that disallowed trading of ETPs in the UK. However, last ETC group became the first firm to offer derivative products in the country and 21Shares is the latest entrant in the market.
The deal has bore fruit after successful intervention by GHCO, the clearing house and the liquidity provider specialising in Exchange Traded Funds. The product by 21Shares will be centrally cleared and will be used like an ETF.
ETPs to drive investor demand
Investors in the UK have a new product to trade wherein they can hedge their risk exposure considerably. Hedging on Bitcoin is bound to reap benefits as the digital currency is very volatile and suffers from speculative trading.
The cryptocurrency market in the UK will become efficient as investors will now be able to replicate the returns of the actual digital currency. Arbitrage opportunities in the cryptocurrency space will increase considerably although the presence of computational superpowers will erase them instantly.
Bitcoin’s price is very high for a retail investor to enter and continue trading in it. Hence, they are bound to benefit from the ETP provided by 21Shares as the risk is minimized and the investment corpus is diversified.
Crypto stance in the UK
The ETPs listed on the Aquis Exchange wll allow investors investors to trade in them in 15 different European markets. The framework and regulatory structure will form precedence for future products that will be listed similarly. Hany Rashwan, CEO of 21Shares, believes that it is the right time to enter the institutional market in the UK as the ETP products are liquid and conventional.
Investors also feel that the regulatory authority’s stance towards cryptocurrency has improved post Brexit. The UK has specified that cryptocurrencies are ‘money’ and do not pose a serious threat to the banking and financial ecosystem.
The FCA has laid down regulations for any cryptocurrency exchange that wishes to form a base in the country. The government plans to bring a few cryptocurrencies under the ambit of the financial promotions regulations. While the regulations surrounding a stablecoin are underway, the future of cryptocurrencies is bright.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
