The Financial Conduct Authority (FCA) has proposed lifting its ban on crypto exchange-traded notes (cETNs) for retail investors. Announced today, this shift would allow individual consumers to access cETNs, provided they are traded on FCA-approved exchanges. The decision, aimed at encouraging growth and competitiveness in the UK’s digital asset sector, marks an important change from the 2021 ban that restricted these products to professional investors only.
Why the Shift in Regulatory Stance?
The FCA banned cETNs for retail investors in January 2021, citing their high risk and potential for significant losses. The regulator argued that crypto assets were volatile, poorly understood by everyday consumers, and lacked reliable valuation methods, making them “ill-suited” for retail markets. This followed a 2020 policy statement targeting crypto derivatives and ETNs, driven by concerns over financial crime and market instability.
Fast forward to 2025, the FCA’s stance has reportedly softened due to the growing global acceptance of crypto products and pressure to align with jurisdictions where retail access is already permitted. David Geale, FCA’s executive director of payments and digital assets, emphasized rebalancing risk to let consumers choose high-risk investments, supported by clear risk disclosures. The move also reflects the UK’s ambition to stay competitive in the global crypto race, especially after the US approved spot Bitcoin ETFs.
UK’s Crypto Regulatory Outlook
The UK is steadily building a robust crypto regulatory framework. Beyond the cETN proposal, the FCA has introduced rules like anti-money laundering requirements for crypto exchanges and strict financial promotion guidelines to curb misleading ads.
In 2024, the agency permitted professional investors to access cETNs, reflecting ongoing regulatory efforts for digital assets, including stablecoins. Historical bans, like the 2020 crypto derivatives restriction, highlight the FCA’s cautious consumer protection approach. Nevertheless, firms like Coinbase and Gemini have flourished in the UK by adhering to money laundering regulations, benefiting from the country’s strict but clear regulatory environment as a crypto hub.
The new proposal signals a new era for UK crypto investment, balancing growth with consumer protection. However, strict compliance remains crucial. In 2023, crypto exchange Binance ceased UK operations after failing to meet FCA registration requirements, a reminder of the regulator’s firm stance on unregulated players.
