The UK Financial Conduct Authority (FCA) has announced plans to lift its ban on cryptocurrency exchange-traded notes (ETNs) for retail investors, in a move aimed at reinforcing Britain’s standing in the global crypto finance arena.
Under the proposed rule change, retail investors would be able to access crypto ETNs listed on FCA-approved investment exchanges, opening up a previously restricted segment of the market.
Until now, access was limited to professional investors due to concerns over price volatility and consumer risk.
Part of Broader Digital Asset Strategy
The proposal forms part of the FCA’s wider Digital Asset Policy Framework, detailed in its latest quarterly consultation paper.
The regulator emphasised the need for clear, structured risk disclosures, ensuring retail investors are well-informed while retaining full responsibility for any losses — as is the case with other high-risk financial products.
Crypto ETNs differ from ETFs in that they do not hold physical cryptocurrencies. Instead, they track digital asset prices using debt instruments issued by financial institutions, offering a more indirect — but often cost-effective — way to gain exposure to crypto markets.
FCA Sets Conditions to Safeguard Market Integrity
According to the FCA, crypto ETNs would need to be listed on a recognised investment exchange to be eligible under the new regime.
This approach ensures products are offered within a controlled and regulated environment, while maintaining the current ban on crypto derivatives for retail clients.
The regulator also confirmed that all existing financial promotion rules would apply to these instruments, in a bid to prevent misleading marketing and protect consumer interests.
Potential Growth in UK Crypto Market
While crypto ETNs — such as those launched by 21Shares and Invesco — are currently available on the London Stock Exchange, retail access remains blocked following the FCA’s January 2021 ban.
If the proposals go ahead, retail trading volumes could rise significantly, supporting the UK’s ambitions to become a competitive hub for digital finance.
This move comes as the government and regulators continue to implement a phased approach to crypto regulation, balancing innovation with investor protection.
Future FCA consultations are expected to cover key areas such as stablecoins, crypto custody, staking services, and trading platforms, with full regulation expected by 2026.
Broader Transparency and Political Scrutiny
Meanwhile, concerns around crypto transparency have spilled into the political arena, particularly regarding digital asset donations to political parties.
MPs have recently debated whether electoral finance rules should be tightened to improve the traceability of cryptocurrency-based contributions and prevent abuse.
