21Shares, a leading issuer of exchange-traded products (ETPs) for cryptocurrencies, has called on the UK's Financial Conduct Authority (FCA) to adapt its stance on crypto exchange-traded notes (cETNs).
21Shares' Appeal to FCA
In its response to FCA Consultation Paper CP25/16, 21Shares welcomed the regulator's intent to allow access to cETNs, but expressed concerns that the current proposals remain overly restrictive.
Key Concerns and Recommendations
The company flagged three primary concerns: 1. Geographic restrictions that limit access to cETNs listed only on UK recognized investment exchanges, excluding similar products from overseas, which reduces retail investor choices. 2. Sole reliance on UK exchanges for asset eligibility creates concentration risks, as the London Stock Exchange currently lists only Bitcoin and Ethereum cETNs. 3. Opposing the FCA's proposed classification of cETNs as Restricted Mass Market Investments (RMMIs) could reduce market liquidity and hinder their inclusion in diversified portfolios.
Impact on the Crypto Investment Market
To foster a more competitive and innovation-friendly market, 21Shares recommends that the FCA recognize regulated cETNs listed on overseas exchanges, create a transparent framework allowing a wider range of crypto assets as eligible underlyings, and classify cETNs as Readily Realizable Securities (RRS) instead of RMMIs.
Thus, 21Shares emphasizes the need for FCA to reconsider its approach to crypto exchange-traded notes to ensure greater accessibility and choice for retail investors in the UK.
