UK regulator may lift crypto ETN ban for retail investors
FCA proposes retail access to crypto ETNs in UK
The UK Financial Conduct Authority (FCA) has announced a proposal to lift its longstanding ban on crypto exchange-traded notes (ETNs) for retail investors.
The move is part of a broader initiative aimed at fostering economic growth and strengthening the UK's position in the global digital finance market, the regulator reported.
Crypto ETNs, or cETNs, have been restricted to professional investors since 2020. The FCA now seeks to align with jurisdictions such as the United States, Canada, and the EU, where retail investors can already access these investment vehicles. Under the proposed changes, retail investors in the UK would be allowed to purchase ETNs—provided they are listed on a Recognized Investment Exchange (RIE) and subject to financial promotion rules ensuring investor protection.
Support for innovation with guardrails on risk
David Geale, executive director of payments and digital finance at the FCA, emphasized the importance of balancing innovation with risk. “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,” Geale stated in a press release.
Unlike exchange-traded funds (ETFs) in the U.S. that hold the actual underlying assets, ETNs are debt instruments issued by financial institutions. They track the performance of an asset—like Bitcoin—without directly owning it. This structure introduces credit risk but can offer an alternative way to gain exposure to digital assets.
Next steps and industry implications
The proposal forms part of the FCA’s quarterly consultation paper, which includes additional efforts to reduce burdens on financial firms and accelerate regulatory clarity in the crypto sector. While the consultation signals a progressive stance, the FCA has not specified when the rule changes would be implemented.
If adopted, the decision could invigorate crypto retail participation in the UK and bolster its status as a forward-thinking financial hub. Analysts say it may also serve as a litmus test for broader crypto adoption in traditional financial markets.
We also wrote earlier that FCA grants Blackrock crypto asset firm status, Galaxy Digital's derivatives approval.
