UK Lifts Ban on Crypto Exchange-Traded Notes

The FCA’s proposal marks a significant shift in regulatory policy, offering UK retail investors access to crypto-linked ETNs on recognized exchanges.

The UK’s decision to lift its ban on crypto ETNs involves the UK Financial Conduct Authority, which initially implemented the prohibition in 2019. Retail investors in the UK have been restricted from accessing structured crypto products, unlike their U.S. and EU counterparts, due to concerns about volatility and investor harm. The proposed lifting of this ban is seen as a move from “caution to pragmatism,” enabling broader market participation.

Retail investors will now have opportunities to invest through regulated financial products, reducing previous direct market risks. Laurent Kssis from CEC Capital and Duncan Moir from 21Shares have publicly supported the change. The FCA’s stance reflects the evolving market landscape, allowing for regulated crypto investment products. Sheldon Mills, Executive Director at the FCA, notes the potential for market modernization, despite associated risks.

The proposal allows UK retail investors to engage with crypto markets similar to the EU and the U.S. Recent changes in the U.S., particularly the approval of spot bitcoin ETFs, have prompted renewed interest in regulated crypto investment avenues. This proposal symbolizes a considerable policy shift that aims to balance risk and opportunity for retail investors. Key markets like the UK, by implementing these regulatory changes, demonstrate adaptability to global financial trends. These moves may likely influence a broader uptake of crypto investment products.

“We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them given they could lose all their money.” — Sheldon Mills, Executive Director, FCA