The UK government has officially lifted its four-year prohibition on crypto exchange-traded notes (ETNs), a decision that analysts predict could potentially expand the UK cryptocurrency market by twenty percent.
On Wednesday, the Financial Conduct Authority (FCA) announced that retail investors can once again trade crypto ETNs through FCA-approved exchanges in the UK.
Crypto ETNs are debt instruments that enable investors to gain exposure to cryptocurrencies without having to own the actual assets. These products trade like conventional securities with the underlying cryptocurrency held securely by regulated custodians.
“Since we restricted retail access to crypto ETNs, the market has evolved, and products have become more mainstream and better understood. In light of this, we’re providing consumers with more choice while ensuring there are protections in place,” said David Geale, FCA executive director of payments and digital finance.
The initial ban on crypto ETNs was established in January 2021, with the FCA expressing concerns that these products were inappropriate for retail consumers due to the associated risks and a perceived lack of legitimate investment demand at that time.
The FCA’s latest decision indicates a notable shift in attitude, as the government has become progressively more supportive of the crypto industry over recent years, especially in anticipation of a comprehensive regulatory framework to be introduced following a leadership change in July.
In this announcement, the FCA also confirmed that the prohibition on retail access to cryptoasset derivatives will remain, but it will continue to monitor market developments closely.
Crypto ETNs Eligible in Retirement Accounts
Alongside lifting the ban on crypto ETNs, the UK government’s recent policy statement addresses the tax treatment of these products in specific tax-advantaged investment accounts.
From October 8, crypto ETNs will be permitted in regulated pension schemes, and by April 2026, access will be extended to Stocks & Shares Individual Savings Accounts (ISAs), offering citizens a few tax-incentivized options for these investments.
“The government remains supportive of the UK’s growing cryptoasset sector and continues to develop a comprehensive regulatory framework that fosters innovation while protecting consumers,” the statement indicated.
Market Potential with Crypto ETNs
A recent report from IG Group forecasts a potential 20% growth in the UK crypto market propelled by the reintroduction of crypto ETNs. According to this report, about 30% of UK adults are open to investing in crypto via ETNs, largely due to the perceived safety and regulatory oversight associated with these products.
“This represents a significant potential uplift from current levels of crypto ownership — 12%, as noted by the FCA, and 25%, according to IG’s new survey.”
