Key Points
- The UK proposes lifting its 2019 ban on crypto ETNs for retail investors. The move is aimed at boosting the UK’s competitiveness in digital assets.
- The FCA continues to warn of high risks and urges investors to make informed decisions.
- Crypto firms praise the move as a significant step toward market maturity.
- A comprehensive regulatory framework for crypto in the UK is expected by 2026.
The UK is preparing to lift a ban on crypto exchange-traded notes (ETNs), signaling a major policy shift aimed at enhancing its global competitiveness in the digital asset sector.
On Friday, the Financial Conduct Authority (FCA) proposed allowing retail investors to access crypto ETNs—debt instruments linked to cryptocurrencies traded on regulated exchanges. These notes provide a simplified way for consumers to gain exposure to crypto assets without directly owning them. The FCA had banned the sale of crypto ETNs to retail investors in 2019, citing risks to consumer protection.
Now, the regulator states that it aims to rebalance its approach to risk and support innovation in the cryptocurrency space. “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, FCA Executive Director for Payments and Digital Assets. He emphasized that lifting the ban empowers investors to make informed decisions. However, they must still understand the high-risk nature of such investments.
Crypto industry leaders have welcomed the announcement, calling it a long-overdue step toward aligning with other major markets, such as the U.S. and the European Union. Spot crypto ETFs have been available in the U.S. since early 2024, following SEC approval of bitcoin-linked exchange-traded funds.
In April, the UK government published draft legislation aimed at making the country a global hub for digital assets. Meanwhile, the FCA is developing a comprehensive regulatory framework for crypto, which is expected to be in place by 2026.
CryptoUK board advisor Ian Taylor said the move could improve consumer protection while helping the UK catch up to other jurisdictions. Kraken’s UK general manager, Bivu Das, called it a “major milestone,” noting that outdated rules are being reassessed in light of a maturing market.
The FCA’s consultation is ongoing, and a final decision will be made following feedback from industry stakeholders.
