UK u-turn on retail access to crypto ETNs signals push to become crypto hub

The United Kingdom’s financial regulator has lifted a ban on crypto exchange-traded notes (cETNs) for retail investors in a move welcomed by industry leaders as a step toward aligning the country with global crypto markets and strengthening its position as a digital asset hub.

On Friday, the UK’s Financial Conduct Authority (FCA)  reversed the ban  on retail access to cETNs, with regulatory changes taking effect from Oct. 8. The ban was enforced in January 2021, citing extreme volatility and “lack of legitimate investment need.” 

The cETN ban reversal reflects a change in the regulator’s approach to crypto assets. In a statement, an FCA executive said the decision reflects how the market has evolved and how crypto-related products are now better understood.

With the FCA lifting the ban, onlookers and industry stakeholders shared their thoughts on the development. Some hailed the move as a step toward progress, while others criticized the UK using satire. 

Community reacts to FCA lifting the ban on crypto ETNs

“We are delighted to see this reversal,” said Ian Taylor, board adviser at CryptoUK and chief operating officer of HT Digital. “Until now, the UK has been an outlier on ETNs. This change reflects the progress we’ve made toward introducing a more proportionate approach to consumer risk.”

Taylor told Cointelegraph that CryptoUK, a trade association for the digital asset industry, has been lobbying for more inclusive access to regulated products like ETNs, which track the performance of crypto assets without requiring direct ownership. 

Riccardo Tordera, the director of policy and government relations at the UK-based payments industry body, The Payments Association, echoed Taylor’s optimism:

“The intrinsic nature of crypto means it can be accessed by everyone, from everywhere. The FCA ban on retail access to certain crypto products was hindering the UK’s chances of becoming a global crypto hub.”

Tordera told Cointelegraph that the FCA’s decision allows individuals to “make their own choices at their own risk.” 

He said restricting access to the cETNs puts the UK at a disadvantage, undermining its global competitiveness.

“This is a welcome move,” he added. “The FCA ban was extremely protective and was already smoothed when professional investors were allowed access last year.”

While some welcomed the move, skeptics also chimed in. WallStreetBets founder Jaime Rogozinski summed up the moment with sarcasm, saying, “Britain loves financial risk—just not the kind that involves, say, vegetables or an industrial policy.”

  Source: Jaime Rogozinski

Crypto derivatives remain banned

While the FCA reversed its ban on cETNs, the regulator clarified that crypto derivatives are still prohibited. 

“The FCA’s ban on retail access to crypto asset derivatives will remain in place,” the FCA  said  on Friday.

Crypto derivatives include futures, options and perpetual contracts. The regulator added that it will monitor market developments and consider its approach to high-risk investments.