The UK financial watchdog has given the green light for the UK's first 'physically backed' spot bitcoin and ethereum exchange-traded funds.
WisdomTree has received approval from the Financial Conduct Authority to list its two exchange-traded products on the London Stock Exchange.
As a "physical" spot cryptocurrency ETF, unlike the previously more comment futures ETFs, these products invest directly in the cryptocurrencies as the underlying asset rather than derivatives contracts based on their prices, so they track the 'spot' price, ie the current price rather than futures prices.
Because the companies such as WisdomTree that manage spot bitcoin and ether ETFs have to buy the cryptocurrencies in order to guarantee this "physical" backing, it also has provided a boost to the prices of those digital coins.
The WisdomTree Physical Bitcoin and WisdomTree Physical Ethereum are already listed on Deutsche Börse (ETR:DB1) Xetra, the Swiss Stock Exchange SIX, and Euronext exchanges in Paris and Amsterdam.
Alexis Marinof, WisdomTree head of Europe, said FCA approval of the prospectuses for the two crypto ETPs is "a significant step forward for the industry and UK-based professional investors seeking exposure to the asset class".
He said UK-based professional investors are already able to allocate to crypto ETPs via overseas exchanges, but this will provide "a more convenient access point".
"FCA approval in this respect could result in greater institutional adoption of the asset class, as many professional investors have been unable to gain exposure to Bitcoin and other cryptocurrencies due to regulatory limitations and uncertainty – we would expect FCA approval of our crypto ETPs’ prospectus to remove those barriers to entry," he added.