The UK’s Financial Conduct Authority (FCA) is preparing to reverse a 2019 ban on retail investors accessing crypto exchange-traded notes (ETNs).
As per an announcement on Aug. 1, the FCA will remove the restriction on retail crypto ETNs starting Wednesday, as long as they are traded on an “FCA-approved, UK-based investment exchange.” Unlike exchange-traded funds (ETFs), which remain banned in the UK for retail traders, ETNs are debt securities linked to crypto without underlying assets.
With this upcoming change, UK-based companies are assessing the implications for retail investors. BlackRock, the largest asset management firm globally, is reportedly exploring options to offer its iShares Bitcoin product in anticipation of retail trading after Oct. 8.
Bitwise CEO Hunter Horsley, whose European operations are located in London, expressed enthusiasm on X about better serving investors in Europe at last.
“Up to this point, the UK has been unique in its ETN stance,” said Ian Taylor, board adviser to CryptoUK, to Cointelegraph. “We hope this decision will enhance consumer protections, and we will continue advocating for lifting the ban on retail access to tightly regulated derivative products.”
An August notice from the FCA indicated that asset managers wishing to trade ETNs for UK retail investors must list them on a “Recognised Investment Exchange.” This decision was informed by discussions with companies, trade bodies, and consumer representatives.
Related: UK permits retail access to crypto ETNs, indicating ambitions to become a crypto hub
Reported Delays in Company Offerings
Firms operating in the UK, like CoinShares and Bitwise, are set to offer exchange-traded products linked to digital assets. However, the Financial Times reported that retail investors may experience delays of up to a week before they can start trading, as the FCA begins accepting prospectuses only on Sept. 23, two weeks prior to the ban’s removal.
The regulator will likely need to review offerings from firms and follow up with any questions or concerns.
As of Friday, the FCA had not indicated plans to lift a similar ban on ETFs or crypto derivatives for retail investors.
“While many respondents requested retail access to cryptoasset ETFs, current regulations prevent ETFs marketed to UK retail investors from investing directly in cryptoassets,” the FCA stated in its August notice regarding the ETN ban lift. “This regulatory framework would need to be revised to permit retail investors to access cryptoasset ETFs.”
In contrast, spot cryptocurrency-tied ETFs have been available for trading in the US since receiving approval from the Securities and Exchange Commission in January 2024. The agency is currently operating under constraints due to lawmakers failing to pass a government funding bill before Oct. 1, which hinders its ability to review any crypto ETFs.
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