The launch of ETFs backed by Bitcoin and Ethereum on the London Stock Exchange (LSE) in the UK has not seen the expected trading volumes since their approval by the Financial Conduct Authority (FCA) on May 28. These products are only available for professional investors, unlike their US counterparts. However, 21Shares, one of the issuers of these ETFs, believes that opening up these products to the retail market could bring a significant change in the trading volumes.
21Shares offers eight cross-listed products in the UK, with four powered by Bitcoin and four powered by Ethereum. WisdomTree manages four ETFs, two for Bitcoin and two for Ethereum, while Invesco offers two Bitcoin-backed products. For crypto ETFs to be listed on the LSE, they must be physically backed, unleveraged, and offer exposure only to Bitcoin or Ethereum.
Despite the launch, the total trading volume of all these products was just $504,880 as of June 6. WisdomTree accounts for 59% of the transaction volume, while 21Shares accounts for 41%. In contrast, Invesco’s products have not seen any transaction volume so far. This is in stark contrast to the US, where spot Bitcoin ETFs saw $2.5 billion worth of trading volume in a single day.
Among 21Shares’ products, Ethereum offerings were more successful, accounting for 76% of transaction volumes. Within this, 21Shares’ Ethereum Staking ETFs saw approximately 57% more trading volume than the Core Ethereum product without staking returns. It was also noted that professional investors typically engage in over-the-counter (OTC) trading, buying and selling financial instruments outside of official exchanges like the LSE.
In conclusion, the trading volumes of ETFs backed by Bitcoin and Ethereum in the UK have not met expectations since their launch on the London Stock Exchange. Despite being available only to professional investors, there is optimism that opening up these products to the retail market could lead to a significant increase in trading volumes. With various issuers offering physically backed, unleveraged ETFs with exposure to Bitcoin and Ethereum, it remains to be seen how these products will perform in the UK market compared to the US.
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