UK Financial Regulator Considers Lifting Crypto ETNs Ban

This change aligns with competitive global regulations and could enhance the UK’s crypto market depth, potentially boosting usage of regulated ETN products.

The proposal from the Financial Conduct Authority (FCA) focuses on ending a retail ban on crypto ETNs, originally enforced in 2021. David Geale, FCA’s Executive Director, highlighted the aim to rebalance risk approaches to allow people the choice for high-risk investments.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk, and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.” — David Geale, Executive Director, Payments and Digital Finance, FCA.

Laurent Kssis, an industry expert, noted the significance of such a move, saying it was about time due to tremendous pressure on the FCA. If approved, UK retail investors could access regulated ETNs, joining peers in regions like Europe, the US, and Canada.

This proposal could impact Bitcoin, Ethereum, and other large-cap tokens eligible for ETN structuring. Duncan Moir from 21shares remarked on the potential for UK investors to finally access regulated products on exchanges, a step currently unavailable.

Historically, similar decisions, such as the US’s approval of spot Bitcoin ETFs, have significantly influenced regulated crypto product inflows. The FCA’s move might stimulate deeper market participation and reinforce its status in the global crypto regulatory landscape.

Expectations for the crypto market include improved legitimacy for ETN products and reinforced consumer protection measures. Investor options may broaden, with remaining restrictions on crypto derivatives ensuring ongoing safeguards.

Future outcomes may include increased regulatory and market activity as businesses and investors adjust to the changing landscape. Historical trends suggest enhanced market legitimacy and participation, given similar international precedents.