FCA moves to lift retail ban on crypto ETNs to boost UK market competitiveness

The UK’s Financial Conduct Authority (FCA) has proposed lifting its longstanding ban on retail investors buying exchange-traded products (ETPs) tied to cryptocurrencies.

The move comes as part of an effort to revitalize Britain’s crypto competitiveness and better align the market with the United States, where crypto ETFs have surged in popularity under the Trump administration.

If implemented, the new rules would allow retail investors access to exchange-traded notes (ETNs) backed by cryptocurrencies like Bitcoin and Ether, provided they are listed on FCA-approved exchanges.

These products have so far been restricted to professional investors despite being tradable on venues like the London Stock Exchange since last year.

US market pressure drives policy shift

The FCA’s policy rethink comes as crypto investment products have gained rapid traction in the US.

Spot Bitcoin ETFs, introduced there in early 2024, now manage over $130 billion in assets — a figure that dwarfs the combined $16 billion under management by European crypto ETPs.

That disparity has intensified pressure on UK regulators to support innovation and prevent the country from falling further behind.

Source: Bloomberg

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, the FCA’s executive director of payments and digital assets.

“We want to rebalance our approach to risk and allow people to make the choice on whether such a high-risk investment is right for them.”

The FCA’s ban on retail access to cryptoasset derivatives will remain in place.

FCA’s change in stance regarding crypto

The proposal represents a notable departure from the regulator’s past messaging.

In 2021, the FCA warned retail consumers that investing in cryptocurrencies and related products could lead to total financial loss.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money,” the FCA had said in a dire warning.

At the time, the watchdog said such investments were too risky and not protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme.

While those warnings remain valid, the FCA now appears to be signaling a shift toward giving retail investors more autonomy, albeit with full awareness of the risks.