Key Takeaways
Retail Access Restored: The UK’s Financial Conduct Authority (FCA) will permit retail investors to buy crypto exchange-traded notes (ETNs) for the first time since 2019.
Regulated Trading Only: cETNs must be listed on FCA-approved exchanges (Recognised Investment Exchanges or RIEs), with financial promotions rules ensuring risk transparency.
High-Risk Warning: The FCA emphasizes investors could “lose all their money,” signaling a cautious but competitive shift in UK crypto policy.
Derivatives Ban Stays: Retail crypto derivatives remain prohibited, highlighting the regulator’s selective embrace of digital assets.
The FCA’s Crypto U-Turn
In a move that caught many by surprise, the UK’s Financial Conduct Authority (FCA) announced plans to lift its ban on crypto Exchange Traded Notes (ETNs) for retail investors, a restriction in place since 2019 over fears of consumer harm. The decision marks an important shift as Britain seeks to align with global crypto hubs, such as the US and EU.
The FCA posted on its X account:
David Geale, the FCA’s Executive Director of Payments and Digital Assets, framed the shift as a rebalancing ac. The proposal now enters a consultation phase, with final rules expected later this year.
Why This Matters
1. The UK’s Competitive Play
With the EU’s Markets in Crypto-Assets (MiCA) framework up and running, and the US approving Bitcoin exchange-traded funds (ETFs), Britain could risk missing out on the $2T+ crypto space. This step by the FCA represents a strategic move to entice blockchain companies. At the same time, it offers a safety net – a way to innovate while providing guardrails for investor protection.
2. Retail Investors: Proceed with Caution
Unlike bitcoin ETFs, which directly hold the asset, ETNs are debt instruments tracking the price of the crypto. They will be listed on a regulated exchange like the London Stock Exchange, with risk warnings imposed on the market. It isn’t a free pass – it will be a controlled experiment.
3. Derivatives Still Off-Limits
The FCA insisted that it would keep its ban on crypto contracts for difference (CFDs) and crypto futures, applying directly to retail traders, based on their “extreme volatility“. The distinction highlights a more nuanced approach; ETNs are risky, but structured; derivatives are “financial quicksand“.
Next Steps?
The consultation could refine rules around marketing and exchange requirements. Meanwhile, the UK’s broader crypto regulation, including stablecoin laws, is still in draft stages.
This could be a milestone, but the real test is whether the UK can build trust without stifling growth.
Thought Starter: Will regulated ETNs lure more Brits into crypto, or will the risks keep them sidelined? With global crypto adoption accelerating, Britain’s balancing act is just beginning.
For more EU crypto-related news, read our article on: Societe Generale Makes Banking History with First Public Stablecoin: USDCV
