UK Set to Lift Ban on Crypto ETNs for Retail Investors

The UK’s Financial Conduct Authority (FCA) plans to lift the ban on crypto ETNs for retail investors, aligning with global markets in September 2023.

The FCA’s decision signals the UK’s intent to enhance its role in the global crypto market, despite anticipated limited retail demand.

The FCA Announces Lifting of Crypto ETN Ban

The UK Financial Conduct Authority announces the lifting of its ban on cryptocurrency exchange-traded notes (ETNs). David Geale, the Executive Director of Payments and Digital Finance at the FCA, leads the initiative to provide retail access to crypto investments.

Senior ETF analyst at Bloomberg, Eric Balchunas, remarks the UK crypto ETFs might not see robust retail demand. The FCA’s proposal aligns the UK with international peers in an effort to expand retail crypto access, despite traditionally lower interest.

Industry experts predict that while institutional involvement may rise, retail engagement will remain modest. BlackRock’s recent registration as a crypto asset firm highlights potential momentum among institutional investors within the region.

The FCA aims to rebalance its approach to risk, allowing retail investors greater freedom to engage with high-risk investments. David Geale, Executive Director of Payments and Digital Finance, FCA, reflects, “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”.

Skyrocketing interest from institutions might change the landscape, though retail demand remains uncertain.

Exact impacts on the market will require observation as volumes on UK exchanges may shift. ETF instruments in place won’t directly alter BTC or ETH’s on-chain dynamics due to their nature as debt securities.

Regulatory changes include a focus on compliance with existing financial promotion rules. This regulatory shift could offer long-term growth potential, though initial changes are likely limited, especially when compared to the U.S. markets.