UK’s FCA Proposes Lifting Ban on Crypto ETNs for Retail Investors

The UK’s Financial Conduct Authority (FCA) has proposed unwinding its ban on cryptocurrency exchange-traded notes (ETNs) to retail investors, reflecting a more relaxed attitude towards digital assets.

The FCA made it clear in a June 6 press release that retail investors would be able to access crypto ETNs if they are traded on an investment exchange that is approved by the FCA. This is a major policy shift since ETNs have not been accessible to retail consumers since 2021 due to risk perceptions.

FCA’s payment and digital assets executive director David Geale said the move reflects a balanced approach:

“Lifting the prohibition would allow people to make up their own minds whether such a high-risk investment is best for them, with a chance to lose all their possessions.”

In Alignment with the UK’s Broader Crypto Goals

Regulatory experts see the step as being in line with the UK’s strategic objectives in the crypto sector. Clifford Chance partner Diego Ballon Ossio called it a sign that the UK is set to “position itself as a sophisticated jurisdiction in the crypto space.”

He pointed out that lifting the retail ban on ETNs could offer fresh avenues for investor access and indicate that the UK is becoming more crypto-friendly.

Regulatory Momentum Dominates

This comes following the FCA’s rapid acceleration of its crypto-regulatory push. In May, the regulator issued a call for public comments on fresh stablecoin and crypto custody service rules.

UK Chancellor Rachel Reeves pledged further recently to offer a “comprehensive regulatory regime” to allow the country to be at the forefront of digital asset innovation. According to reports, the UK is witnessing a sharp growth in crypto holdings, even surpassing adoption rates in the US.

Crypto Donations Galvanize Political Row

There was another row on June 5, in which UK parliamentarians expressed dismay at the growing application of crypto to political donations. Cabinet Office Minister Pat McFadden stressed that fresh guidelines were required that offer transparency in election expenditure.

MP Sarah Olney criticized parties accepting crypto, warning of potential loopholes in donation transparency. Her comments followed Nigel Farage’s June 4 announcement that Reform UK would accept Bitcoin and other cryptocurrencies from eligible donors.

“We are the first political party in Britain to accept donations in Bitcoin,” said Farage. “We’re catching up with America.”

Conclusion

The FCA’s proposal to reintroduce crypto ETNs to retail investors can reshape the UK’s digital asset landscape, demonstrating enhanced interest and regulatory recognition of crypto’s mass appeal.