Key Takeaways
- The UK FCA has officially lifted the ban on Bitcoin and crypto ETNs.
- The move will allow the UK’s retail investors to get digital asset market exposure via ETN products.
- However, industry participants still remain furious as the actual implementation of the change will take time.
The Financial Conduct Authority (FCA) has officially lifted its ban on crypto exchange-traded notes (ETNs), a long-awaited act that has been expected to allow the UK retail customers to enter the digital asset market. However, the retail investors cannot get their hands on the products even after the ban has technically been lifted on Wednesday. The industry members attribute the delay to the slow pace at which the regulator can execute the ban.
Industry Experts Open Up as UK FCA Lifts Bitcoin, Crypto ETN Ban
Players in the market believe that the delay highlights a deeper malfunction in the way in which Britain regulates crypto. “It’s both embarrassing and entirely predictable,” said Laurent Kssis, director at CEC Capital and an ETF trading specialist. “The FCA announced back in August that the restriction would end on October 8, but now investors are being told they may need to wait almost another week. That’s because the FCA only began reviewing prospectuses on September 23, just a fortnight before launch.”
The move by the regulator in August had ignited hope among issuers and exchanges that were getting ready to re-launch ETN products after an almost 4-year hiatus. But, as retail access remains frozen, trading desks are in a vacuum as the London Stock Exchange (LSE) and the FCA get their operational framework in place in regards to the listings.
When Will Crypto ETNs Be Actually Available To Retail Investors?
As per those who are well-versed with how this is being done, the two entities still have technical concerns, like whether a new market niche needs to be developed that is specific to crypto ETNs available to retail traders. This confusion may drive the launch of the initial listings to about the 13th of October or beyond.
LSE affirmed that it is awaiting regulatory conformity to open its market to crypto ETNs that are retail eligible. “We welcome the FCA’s decision to enable retail access to crypto ETNs and look forward to expanding our Main Market offering,” said Alex Watkins, the exchange’s ETP Business Development Lead. “We’re ready to proceed once the FCA approves the Retail Base Prospectuses submitted by potential issuers.”
In January 2021, the FCA first prohibited retail trading of crypto ETNs, stating that it poses a potential harm to the protection of investors and expressing an overall worry regarding volatility and fraud. Digital asset advocates heavily criticised the decision, claiming that it restricted access of UK investors in regulated investment vehicles at a time when comparable products were booming in Europe and the United States.
According to Kssis, more serious weaknesses in the coordination and planning of the regulator lie in the continuing delays. “They’ve had since June, after their own consultation, to align operational details with the LSE,” he said. Kssis added, “Yet here we are, with both sides still going back and forth while UK investors remain locked out of a market that their American and European counterparts have enjoyed freely.”
He described the situation as “regulatory incompetence masquerading as consumer protection,” per a report by CryptoNews. Kssis added that since Bitcoin is trading at above $120,000 recently, the frustration felt by the retail investors who want to get their exposure regulated by domestic markets only worsened.
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