UK FCA to Allow Retail Investors Access to Crypto ETNs from October 8

The UK’s Financial Conduct Authority (FCA) will allow retail investors to trade crypto exchange-traded notes (ETNs) starting October 8. This marks a partial reversal of its 2021 ban on crypto investment products. However, crypto derivatives remain off-limits.

Only ETNs listed on Recognised Investment Exchanges will qualify. Investors must also accept full risk, there is no compensation coverage.

Why the FCA Changed Its Position

In 2021, the FCA banned crypto ETNs over concerns about volatility and investor harm. That ban kept retail users from accessing products tied to crypto prices.

But things have changed. The FCA now believes the market is more mature. Crypto products are better understood, and investors are more informed.

“Since we restricted retail access to cETNs, the market has evolved,” said David Geale, the FCA’s director of payments and digital finance. “We’re now offering more choice – alongside protections.”

Strict Rules for ETN Providers

Firms offering crypto ETNs must follow detailed rules. These include:

• Clear risk disclosures
• No aggressive marketing
• Suitability checks for investors
• Transparent pricing and product terms

Only ETNs listed on approved UK exchanges qualify. And investors won’t get protection from the Financial Services Compensation Scheme (FSCS). If an issuer fails, users could lose their entire investment.

Crypto ETNs are not the same as owning digital tokens. They are unsecured debt securities that mirror crypto prices. Investors hold no actual crypto and have no claim on the assets.

Crypto Derivatives Stay Banned

While ETNs get a green light, the FCA is keeping its ban on crypto derivatives for retail users. Products like futures and options remain restricted. The regulator still sees them as too complex and risky.