Cryptocurrency about to Join the London Stock Exchange
Trading activity is diminishing on the London Stock Exchange (LSE). In an attempt to bring more traders in, the exchange will add cryptocurrencies.
We could soon see Bitcoin (BTC), Ethereum (ETH), and even Dogecoin (DOGE) listed on the London Stock Exchange. As the cryptocurrency market expands and picks up steam, it is getting noticed by conventional investment firms.
The LSE will be launching a new market on May 28th this year that will focus on crypto ETNs (exchange-traded notes). These will include Ethereum and Bitcoin for now.
The LSE has traditionally stuck with more conventional blue-chip stocks- stocks that come from established companies with a good reputation and a high market cap. Offering crypto ETN marks a deviation from form. By listing crypto products on its exchange, the LSE may get out in front of a new way of financial markets that do something similar and embrace cryptocurrency alongside their more traditional offerings.
What Are ETNs?
For those wondering just what these crypto products are, ETNs are unsecured debt securities. They work similarly to stocks and track a basic index of securities, similarly to how a stock would work. They operate similar to bonds as well but with one major difference- there are no interest payments. ETN rates are able to change the same way stocks do.
Traders would be able to sell their ETNs and earn profits, but they would be required to pay fees as with any stock. Financial institutions will issue these and use a market index to determine value on a moment-by-moment basis. ETNs, unlike stocks, do not offer traders any ownership of the security.
The risk to the investor is similar to that of stocks. If the price drops below the purchase price, traders will need to cover the difference and will lose money on their purchase.
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