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21Shares Says Low Trading Volumes on LSE Is in Line With Expectations

Tanzeel Akhtar
Last updated: | 2 min read

21Shares bitcoin and ethereum exchange-traded notes (ETNs) listed on the London Stock Exchange (LSE) are attracting low volumes but this is in line with expectations, said a spokesperson from the firm.

In May, 21Shares launched four new physically-backed crypto exchange-traded notes (ETNs) including the 21Shares Bitcoin ETN, 21Shares Ethereum Staking ETN, 21Shares Bitcoin Core ETN, and the 21Shares Ethereum Core ETN.

Investors Already Have Access to Similar Products

CryptoNews reported that London-listed crypto ETNs are failing to attract inflows due to the lack of institutional demand, citing crypto ETP providers.

“We disagree that it’s a lack of institutional or professional interest, and we believe it’s more related to the fact that these investors have had access to these products for years on exchanges outside of the UK,” said a spokesperson from 21Shares.

“The trading volumes on LSE are low, which is in line with our expectations,” said 21Shares.

The crypto ETNs are restricted to professional investors only, under Financial Conduct Authority (FCA) regulations. The FCA does not allow retail consumers to invest in the products and placed a ban on the sale of crypto derivatives and ETNs in 2021.

Laurent Kssis, an independent board member of Issuance Swiss AG said there is the lack of institutional demand. Institutional investors, such as hedge funds, pension funds, and asset managers, are often considered the primary drivers of significant trading volumes in traditional financial markets.

Hector McNeil HANetf co-founder and co-CEO told CryptoNews, “The LSE is very late to the party.” McNeil highlights there is plenty of liquidity in markets like Xetra German Electronic Exchange.

21Shares went on to add that the FCA opening up the UK market to professional investors for these products is a huge step in the right direction.

The FCA and LSE stamp of approval has meant that many wealth and private banking platforms are now actively considering how they can either offer or add a BTC or ETH allocation to the portfolio for their professional clients.

“In our case, these [crypto ETNs] are cross-listings of existing products, and professional investors are going to trade on markets with the most liquidity — which as of now is Xetra,” said 21Shares.

Opening Market to Retail Will Be Game Changer

Despite the slow start 21Sahres said it expects to see more trading volume once the platforms complete their onboarding process for the newly listed ETPs.

“We still believe the FCA approval for professional investors in the UK is a really important step for the asset class, and we look forward to the market opening up for retail at some future time – which will be more of the “game changer” moment,” said 21Shares.