Cryptocurrency is largely unregulated, decreasing its utility in many countries. However, as cryptocurrency picks up steam, several countries are beginning to recognize its legitimacy. The UK is just one of the recent countries to develop a new cryptocurrency policy, causing a surge in Bitcoin prices.
The Financial Conduct Authority issued a notice on Monday saying that it would not object to the creation of a UK-listed market segment for crypto-based exchange-traded notes by recognized exchanges. However, these exchanges must ensure sufficient controls are in place to allow for orderly trading and protection for professional investors alongside meeting all regulatory guidelines for the UK's listing regime. This move comes after the US approved the first spot bitcoin exchange-traded fund.
The Impact of the New Policy on Bitcoin Prices
The news comes as a big boon to Bitcoin investors, as the cryptocurrency surged over 3% in the initial hours, hitting an all-time high of $72,211 at 6:50 a.m. ET. At the time of writing, one BTC is worth $72,526 at 1:30 pm ET, signifying an increase of 5%. As the day progresses, investors expect the price to increase even further.
Keeping track of the price is essential if you are looking to buy Bitcoin anytime soon. Other cryptocurrencies are also on the track for a price surge. This is the highest value of Bitcoin ever recorded since 2021, when the coin was at $68,982 on Nov 10, 2021.
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The Significance of the New Policy
The UK’s new policy has far-reaching consequences for the cryptocurrency ecosystem. The London Stock Exchange has already acknowledged the new policy and in a separate statement, has announced that the exchange will accept applications to admit Bitcoin ETNs from this year’s second quarter. As per the FCA, only professional investors are allowed to buy Bitcoin ETNs, as UK law prohibits retail investors from purchasing crypto-linked ETNs, citing possible risks for consumers.
Last year in the United States, the Securities and Exchange Commission (SEC) approved the trading of crypto ETFs. UK’s approval of crypto ETNs is being seen as the next big step for crypto. While ETFs and ETNs sound similar, an ETF is just a fund that holds assets, while an ETN is a bank-issued unsecured debt security, and is typically linked to a market benchmark. Upon maturation, an ETN will pay out the full value of the index it is benchmarked with.
Due to the central nature of ETNs in modern finance, the FCA’s decision is likely to increase institutional investment in bitcoin and other cryptos. As more money moves in the crypto market, crypto investors can expect a price surge, and Bitcoin may continue its bullish trend.
FCA’s new policy signifies a shifting stance in UK regulatory authorities on cryptocurrency. In 2020, FCA banned selling any crypto-linked ETNs to consumers, owing to the risky nature of ETNs and the harm consumers can suffer from unexpected losses. The current decision marks a significant shift from the regulator’s earlier position.
Endnote
Not many nations currently recognize crypto, but this currency’s popularity is making governments reconsider their stance and address the needs of crypto investors as legitimate stakeholders. After the SEC’s decision to legitimize crypto-backed ETFs in the USA, the UK regulatory authorities have also updated their position on crypto. The FCA’s new guidelines allow for crypto-linked ETNs, which have had far-reaching consequences in the crypto ecosystem. Most significantly, Bitcoin’s price has hit an all-time high in response to this news and is likely to increase further.
