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- The FCA has progressively relaxed its rigid approach to digital assets, culminating in the removal of its four-year retail ban on crypto ETNs.
- This will now enable retail investors to purchase Bitcoin on regulated platforms, aligning the UK with the U.S. market.
In January 2021, the UK’s Financial Conduct Authority (FCA) took a hard stance on crypto, banning the sale, marketing, and distribution of crypto derivatives and crypto-backed exchange-traded notes (ETNs) to individual investors. Fast forward to October 8, after four long years, the FCA has officially lifted that ban.
This move follows the regulator’s earlier step in March 2024, when it first allowed the London Stock Exchange to list Bitcoin ETNs, but only for institutional investors.
Unlike Exchange Traded Funds (ETFs), which actually hold the underlying assets like Bitcoin (BTC) or gold, ETNs don’t own anything directly. Instead, they’re issued by a financial institution like a bank, which promises to pay you the return of a specific index or asset, minus any fees.
Investors use ETVs because they provide an easy way to gain exposure to assets without setting up a cryptocurrency wallet. They can be held in traditional brokerage accounts, ISAs, or pension accounts, depending on regulations.
The FCA’s rationale for banning these investment tools was grounded in investor protection: these products were seen as too risky, too volatile, and prone to misuse. The regulator judged that retail investors did not sufficiently understand the underlying risks associated with crypto assets. At that time, the FCA also argued there was “a lack of legitimate investment need” for such products for the general public.
Crypto ETNs will fall outside the protection of the Financial Services Compensation Scheme (FSCS), so investors won’t have a safety net if an issuer fails. Companies selling these products must still meet the FCA’s Consumer Duty requirements, including transparent communication and fair treatment of clients.
Aligning With Global Markets
The FCA’s decision opens up new opportunities. UK investors will be able to gain exposure to assets like Ethereum (ETH) through traditional, regulated channels, joining countries such as the United States, Canada, Hong Kong, and members of the European Union, which already allow similar access.
Opening the market to retail investors could bring a surge of new interest and liquidity, signaling a major shift in how crypto fits into the mainstream financial space.
The UK is taking a phased approach to crypto regulation. Previously, we reported that the FCA launched a public consultation seeking feedback on the minimum standards crypto firms should meet. This is part of a plan to build a clearer regulatory framework ahead of the country’s full crypto regime, set to roll out in 2026.
Stakeholders have until 15 October to respond to discussion points and until 12 November for formal consultation proposals.
Once HM Treasury finalizes the legislation, the FCA’s rules will carry real weight. Crypto firms will then be held to many of the same standards as traditional financial institutions, including robust systems and controls, as well as clear accountability for senior management.
