UK FCA to Allow Retail Access to Crypto ETNs

The UK’s financial watchdog, the Financial Conduct Authority (FCA), has announced it will permit consumers to invest in crypto exchange-traded notes (cETNs), aiming to enhance the growth of digital asset adoption in the country.

This change means that cETNs will now be accessible to individual retail investors rather than just professional investors in the UK, provided they are traded on an FCA-approved investment exchange, referred to as a Recognized Investment Exchange (RIE).

The FCA highlighted that similar products are currently available in other jurisdictions. While the ban on retail access to cryptoasset derivatives remains intact, the regulatory body will continue to evaluate market changes and its strategy regarding high-risk investments.

As global regulatory frameworks are established, the UK is looking to stay competitive, with ongoing discussions regarding crypto regulations initiated by the UK government and recent statements from Chancellor Rachel Reeves.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, Executive Director of Payments and Digital Assets at the FCA.

“We want to rebalance our approach to risk; lifting the ban would allow individuals the choice regarding their investments, despite the risks involved,” Geale added.

The existing financial promotion regulations in the UK will ensure that consumers receive comprehensive information about the associated risks and are not subjected to inappropriate incentives to invest.

“This development aligns with the UK’s goal to become a leading jurisdiction in the crypto sector,” remarked Diego Ballon Ossio, Partner at Clifford Chance, in a recent email.

“By allowing retail investors to access crypto assets, it signals that the UK is open to the cryptocurrency market, although further steps regarding the prudent treatment of these assets are necessary.”