The UK’s Financial Conduct Authority (FCA) is preparing to overturn a 2019 ban on crypto exchange-traded notes (ETNs) for retail investors. As of August 1, the FCA announced that retail access to crypto ETNs will be permitted starting Wednesday, as long as these products are traded on an approved, UK-based investment exchange. Unlike exchange-traded funds (ETFs), which remain banned for retail investors, ETNs are debt securities linked to cryptocurrencies, lacking the backing of underlying assets.

With the impending ban reversal, UK-based companies are assessing the implications for retail investors. BlackRock, the largest asset management firm globally, is reportedly exploring options to introduce its iShares Bitcoin exchange-traded product in anticipation of retail trading on or after October 8.

Hunter Horsley, CEO of Bitwise, expressed his enthusiasm on X, noting, “Excited to finally serve more investors in our home market in Europe.”

Ian Taylor, board adviser for the digital assets trade association CryptoUK, stated, “Until now, the UK has been an outlier on ETNs. We trust this decision will enhance consumer protections and advocate for removing the barriers to retail access for highly-regulated derivative products.”

The FCA’s notice from August indicated that any asset management firm wishing to provide ETN trading to UK retail investors must have them listed on a Recognized Investment Exchange. This decision was reached following consultations with companies, trade associations, and consumer advocacy groups.

Delay in Companies’ Offerings

Firms such as CoinShares and Bitwise will be eligible to launch exchange-traded products linked to digital assets in the UK. However, the Financial Times reported that retail investors might have to wait up to a week to commence trading due to the FCA beginning to accept prospectuses only on September 23, two weeks prior to lifting the ban.

As of now, the FCA has indicated no intention to lift a similar ban on ETFs or crypto derivatives aimed at retail investors. The regulator commented that while there were requests for retail access to crypto ETFs, current regulations do not allow UK retail investors to directly invest in cryptoassets. The regulatory framework must be revised before retail access to crypto ETFs is possible.

In contrast, spot cryptocurrency ETFs have been available for trading in the US since their approval by the Securities and Exchange Commission in January 2024. However, current restrictions are in place as US lawmakers have not yet passed a bill to fund the government beyond October 1, limiting the SEC’s capacity to review further crypto ETF applications.