Bitcoin hits new record as UK regulator paves way for crypto-linked securities

Bitcoin, the world’s biggest cryptocurrency, surged past 71,000 US dollars (£55,272) to hit a new high on Monday.

The price of bitcoin has hit an all-time high (Alamy/PA)

The price of Bitcoin has hit a fresh all-time high as Britain’s financial watchdog said it would allow cryptocurrency-linked exchange-traded products for professional investors.

Bitcoin, the world’s biggest cryptocurrency, surged past 71,000 US dollars (£55,272) to hit a record 71,830.99 dollars on Monday, up 3% in the past 24 hours, according to Binance market data.

The rally came as the Financial Conduct Authority (FCA) said it would “not object” to the creation of cryptoasset-backed exchange-traded notes for the first time, while financial markets also increased their bets on an interest rate cut in the US after data showing a rise in unemployment.

The FCA believes exchanges and professional investors should now be able to better establish whether cryptoasset-backed exchange-traded notes meet their risk appetite

Financial Conduct Authority

The FCA decision follows similar moves by regulators in other markets, with Bitcoin enjoying a rally in recent months after the US Securities and Exchange Commission (SEC) gave the green light to cryptocurrency being adopted into more mainstream investment products.

The SEC reluctantly approved trading of the first Bitcoin exchange-traded funds (ETFs) in early January.

But the FCA said while it would allow these products for professional investors, the ban remains in place for retail investors.

It said: “With increased insight and data due to a longer period of trading history, the FCA believes exchanges and professional investors should now be able to better establish whether cryptoasset-backed exchange-traded notes (cETNs) meet their risk appetite.

“The FCA continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose.”

It added: “The FCA continues to remind people that cryptoassets are high risk and largely unregulated.

“Those who invest should be prepared to lose all their money.”

The regulator stressed that exchanges would need to ensure they have sufficient controls in place, “so that trading is orderly and proper protection is afforded to professional investors”.

The SEC’s decision to allow crypto ETFs prompted a wave of investors pouring money into spot Bitcoin ETFs launched by major investment firms such as BlackRock and Fidelity.

The FCA’s move to follow suit is set to spark a similar rush in the UK, with the London Stock Exchange on Monday also saying that it would start to accept applications to list Bitcoin and Ethereum crypto ETNs from the second quarter.

It said an exact launch date will be confirmed “in due course”.

The price of Bitcoin has also been boosted in recent weeks ahead of its next “halving” event in April, which limits the rate of new coins being released, and happens roughly every four years.

The expectation of limited supply alongside growing investor demand has helped inflate prices.

Kathleen Brooks, research director at XTB, said: “There has been 10 billion US dollars poured into the Bitcoin ETFs that launched earlier this year, and there are signs that a small allocation to alterative asset classes like Bitcoin are worthwhile for longer term investors and institutional investors.

“We think that these two factors, along with a supportive macro backdrop, relatively strong market sentiment and the prospect of interest rate cuts from the Fed are also helping to propel Bitcoin higher.”