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Bitcoin and Ethereum ETPs Go Live in UK Today: ETNs vs ETFs, What’s the Difference?

Last Updated May 28, 2024 12:11 PM
Eddie Mitchell
Last Updated May 28, 2024 12:11 PM

Key Takeaways

  • A total of six BTC and ETH-backed exchange-traded products (ETPs) have begun trading on the London Stock Exchange (LSE).
  • Exchange-traded notes (ETNs) typically lack physical backing, but London’s crypto ETNs are required to.
  • The UK FCA is yet to review its ban on crypto ETNs for retail investors.

Just two months after the UK Financial Conduct Authority (FCA) approved applications for Bitcoin (BTC) and Ethereum (ETH)-backed ETPs, they have begun trading on the London Stock Exchange (LSE).

More specifically, crypto is trading on the LSE in the form of exchange-traded notes (ETNs). But how do these differ from the exchange-traded funds (ETFs) available in the U.S.?

Crypto on the LSE

21Shares and WisdomTree crypto exchange-traded notes (cETNs) have begun trading on the LSE, signaling what could be a major shift in attitude towards crypto in the UK.

21Shares  has launched four cETNs namely: 21 Shares Bitcoin ETN, 21Shares Ethereum Staking ETN, 21Shares Bitcoin Core ETN, and the 21Shares Ethereum Core ETN. Meanwhile, WisdomTree has launched two: WisdomTree Physical Bitcoin (BTCW) and WisdomTree Physical Ethereum (ETH).

As one of the world’s financial hubs with deep and liquid markets, the launch of cryptocurrency-backed investment products for institutional entities may finally put the UK on the map as a “crypto hub”.

After holding a rather skeptical view of cryptocurrencies as a legitimate form of investment, the UK’s financial watchdog said in March 2024  that it was not opposed to BTC or ETH ETP applications, though only if they met certain criteria.

Crypto ETNs

The main difference between the crypto ETNs now trading on the LSE and the ones seen in the U.S. is that cETNs must have non-leveraged physical backing according to the LSE “Crypto ETN Admission Fact Sheet “.

They also need to have Bitcoin or Ethereum as their underlying cryptoassets. These assets must be  “wholly or principally” kept in cold storage. Should a cETN issuer intend to use other storage methods, they would need to obtain audit reports and a regulated custodian would need to hold the cETN.


A traditional ETN is an investment type that tracks an underlying index or other metric. They differ from exchange-traded funds (ETFs) in a few key areas.

Key Differences

  • Structure: ETFs are investment funds that hold a portfolio of underlying assets, including stocks, bonds, and commodities. ETNs on the other hand, are unsecured debt securities.
  • Ownership: ETFs hold the assets they track. ETNs are unsecured debt securities that give indirect exposure.
  • Taxes: ETFs typically pay dividends and interest, which are both taxable events. With ETNs, investors only pay taxes when it reaches maturity or when sold on the market.

WisdomTree Approved

WisdomTree, a firm with some $111 billion in assets under management (AUM), was among the first to have its crypto ETP approved by the ever-cautious FCA.

As per the official  press release, WisdomTree was approved to list BTCW and ETHW on the LSE.

Alexis Marinod, Head of Europe at WisdomTree notes that the FCA’s approval is a milestone for UK industry and professional investors looking for exposure to the asset class. This is because UK-based investors have had to seek ETPs overseas up till now.

For Marinod, this will bring greater adoption of Bitcoin and Ethereum and will alleviate the unclear and uncertain regulations around crypto in the UK. He adds :

“[…]we would expect FCA approval of our crypto ETPs’ prospectus to remove those barriers to entry.”

WidsomTree’s ETPs already trade on several European stock exchanges. This includes Deutsche Börse Xetra, the Swiss Stock Exchange SIX, and Euronext exchanges in Paris and Amsterdam, as well as a Bitcoin ETF in the U.S., the WisdomTree Physical Bitcoin fund.

UK Calling for Crypto

The UK’s Financial Conduct Authority (FCA) updated its position  on crypto asset-backed ETNs in March. In doing so, the watchdog opened a path for professional and institutional investors to build a dedicated market segment for these products.

According to an official statement  posted by the FCA on March 11, 2024, the financial regulator will not be rejecting requests from Recognized Investment Exchanges (RIEs) to establish crypto-backed ETNs (cETNs) for professional traders.

According to the FCA, exchanges have to ensure “sufficient controls”. They also have to ensure adequate safeguarding measures are in place so trading can run smoothly, as well as providing the necessary protections for investors.

As for the reason behind the updated position, the FCA writes:

“With increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether cETNs meet their risk appetite.”

The FCA maintained its stance that cryptocurrencies are “high risk and unregulated”. It said that “those who invest should be prepared to lose all their money.” The FCA highlights that cETN products are “ill-suited for retail consumers” due to their posing risks to investors. Meanwhile, the LSE has already announced open up cENT applications soon.

In a March 11, 2024 market notice, the LSE confirmed  that it will be accepting Bitcoin (BTC) and Ethereum (ETH) cETN applications in the second quarter of 2024.

London Stock Exchange announcement
London Stock Exchange prepares for applications.

These latest moves signify a growing appetite for institutional crypto products. It appears as if the approval of US spot Bitcoin exchange-traded funds (ETFs) has catalyzed this move.

UK Crypto Ambitions

The British government is looking to implement crypto reporting frameworks created by the Organization for Economic Cooperation and Development (OECD). It is also pushing to set up legislation around stablecoins and create a central bank digital currency (CBDC).

The government has also passed laws that let authorities seize and destroy crypto assets without first needing a criminal conviction.

Although regulators are opening up to crypto, efforts to regulate crypto or stablecoins appear to have fallen by the wayside in light of the general election announcement. It may be the case that the UK’s “crypto hub” ambitions will be put aside until after the election on July 4, or at least until next year.

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