On this episode of Yahoo Finance Future Focus, our host Brian McGleenon speaks with Alex Pollak, head of UK for 21Shares, about the current investor appetite for bitcoin exchange-traded funds in the US and Hong Kong, as well as the debut of bitcoin and ether exchange-traded notes (ETNs) on the London Stock Exchange (LSE).
Pollak said the listing of bitcoin and ether ETNs in London could mark a significant step towards establishing the UK as a leading crypto hub in Europe. He also discussed how the FCA's phased approach to opening the crypto market could transform the UK's financial landscape.
Despite the potential for developing the UK's digital asset market, Pollak notes that the new ETNs are currently accessible only to professional investors. He highlights that "the game-changer in the UK will be when the retail ban is lifted," indicating that broader access to these products is essential for the market's growth.
Pollak said the listing of bitcoin and ether ETNs in London could mark a significant step towards establishing the UK as a leading crypto hub in Europe. He also discussed how the FCA's phased approach to opening the crypto market could transform the UK's financial landscape.
Despite the potential for developing the UK's digital asset market, Pollak notes that the new ETNs are currently accessible only to professional investors. He highlights that "the game-changer in the UK will be when the retail ban is lifted," indicating that broader access to these products is essential for the market's growth.
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00:00On this week's episode of Yahoo Finance Future Focus, we are joined by Alex Pollock,
00:09Head of UK for 21Shares, to discuss the performance of spot Bitcoin ETFs and what it means for
00:15the Bitcoin market if these financial products start trading on the London Stock Exchange.
00:20Alex, welcome to the show.
00:22Brian, thank you for having me.
00:23Thank you.
00:24So, Alex, is the spot Bitcoin ETF narrative now exhausted as a market catalyst?
00:29And if so, are there any other narratives on the horizon that the crypto market could
00:33grasp onto?
00:35So, I would actually say completely the opposite.
00:39I would say that in terms of adoption in the U.S., we're still at the very beginning.
00:45The launch of the U.S. Bitcoin ETFs has been one of the most successful ETFs launches ever.
00:52But a lot of that was just pent-up retail demand.
00:55So, over the first three months of trading, the 11 products that were approved by the
01:02SEC have amassed about $30 billion.
01:07But institutions have not even started yet on their crypto journey.
01:14So, the money that's coming has been predominantly retail money.
01:19Asset managers now who have held back are now thinking about how they can start allocating
01:24to Bitcoin ETFs and how they can allocate within their multi-asset portfolios.
01:30We've also got pension funds, insurance companies, sovereign wealth funds who are starting to
01:34think as well about how they can adopt and invest into crypto and into Bitcoin.
01:38So, I would say completely the opposite.
01:40We haven't actually seen the beginning of – we're still at the very beginning of adoption
01:48into Bitcoin ETFs in the U.S.
01:50Well, on that positive note, we also have the recently approved Hong Kong ETFs.
01:54Now, are we going to see similar uptake there that we've seen in the U.S.?
01:59The launch in Hong Kong was different to the one in the U.S.
02:03So, importantly, the products that were approved in Hong Kong don't allow investors in mainland
02:10China to invest into them.
02:14And there's only certain types of investors in Hong Kong can actually trade them.
02:18Saying that, it still has been a successful launch.
02:21There's another exciting possible approval or likely approval at the end of this month,
02:26and that is the approval of spot Bitcoin exchange-traded notes on the London Stock Exchange.
02:31Yes, this is one I'm very excited about.
02:33What prospect is that going to have for the Bitcoin market, and are we going to see like
02:38a likely mass adoption from institutional traders or retail traders into that?
02:46So, I'm very excited about the launch in the U.K.
02:50I mean, this is something we've been waiting for for a while.
02:53However, we need to kind of temper this because while it does mean we're going to have Bitcoin
03:00and Ethereum ETFs available on London Stock Exchange, they're only going to be available
03:04for professional investors.
03:05So, it's a very different launch to what we saw in the U.S.
03:09One of the questions I get asked a lot is, is this going to be similar to the U.S. launch?
03:14Are we going to see the kind of volumes in the U.K. that we've seen in the U.S.?
03:17I mean, I think that's very unlikely.
03:20What the FCA is trying to do here is they're trying to open up the market in phases.
03:25So, have a listing on the London Stock Exchange that will be used by professional investors.
03:34The game changer in the U.K., though, will be when the retail ban is lifted.
03:38There is a retail ban at the moment, but I think the fact that we will have products
03:42available on the London Stock Exchange does show progress.
03:46And I think that within three years from now, the U.K. will be home to the largest crypto
03:50ETF market in Europe.
03:52And when we think of where crypto or the digital asset realm has come since November 2022 when
04:01the FTX fiasco happened, do you think we still have overhangs from that?
04:05Do you think we're still suffering under the legacy of what happened there with Sandbank
04:09being freed?
04:11I think we do still have some overhang.
04:14I think the U.K. investor, many U.K. investors are still very cynical.
04:19It's still fresh in the mind of many.
04:21But I also think we're moving past that.
04:23And I think exchanges, crypto exchanges, are doing more and more to show that they're responsible,
04:30they want to follow regulation.
04:32We're seeing more done now around proof of reserves.
04:37Crypto is still very, very early.
04:41I've been in this industry for 25 years.
04:45I remember the early days of the ETF industry over 20 years ago.
04:50People very skeptical about how well ETFs would do.
04:53Will ETFs survive?
04:54Will they grow?
04:55You know, here we are 20 years later and ETFs are one of the biggest, most successful trading
05:02instruments on exchanges globally.
05:05Okay.
05:06Alex Pollock, Head of U.K. for 21Shares.
05:08Thanks for coming on EICB Finance Future Focus.
05:10Thanks for having me, Brian.