21Shares Acknowledges Low Trading Volumes on LSE as Expected

21Shares has reported that trading volumes for their bitcoin and ethereum exchange-traded notes (ETNs) on the London Stock Exchange (LSE) are low but align with the company’s expectations.

In May, 21Shares introduced four new physically-backed crypto ETNs, including the 21Shares Bitcoin ETN, 21Shares Ethereum Staking ETN, 21Shares Bitcoin Core ETN, and the 21Shares Ethereum Core ETN.

Access to Similar Products

CryptoNews highlighted that the low inflows for London-listed crypto ETNs are attributed to a lack of institutional demand, a point disputed by 21Shares. “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.

Regulatory Restrictions

The crypto ETNs are available only to professional investors under Financial Conduct Authority (FCA) regulations, following a 2021 ban on the sale of crypto derivatives and ETNs to retail consumers.

Laurent Kssis, an independent board member of Issuance Swiss AG, noted the absence of institutional demand, which typically drives significant trading volumes. Hector McNeil, co-founder and co-CEO of HANetf, pointed out that the LSE has entered the crypto market late, with markets like Germany’s Xetra already providing substantial liquidity.

FCA Approval and Future Prospects

21Shares emphasized the importance of the FCA’s approval for professional investors in the UK. This regulatory nod has led many wealth and private banking platforms to consider incorporating BTC or ETH allocations into their portfolios for professional clients.

For now, these ETNs are cross-listings of existing products, and professional investors prefer trading on markets with higher liquidity, such as Xetra.

Retail Market Potential

21Shares believes that opening the market to retail investors could significantly boost trading volumes. “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,” the spokesperson added.