UK Financial Regulator Considers Easing Retail Restrictions On Crypto ETNs

The UK’s financial regulator is reviewing its stance on crypto investments and is planning to remove the current restrictions on retail access to crypto exchange-traded notes (cETNs). This proposed change reflects a growing willingness to integrate crypto-related products into traditional financial markets.

If approved, this change would let UK retail investors trade crypto ETNs on FCA-regulated exchanges. Other jurisdictions have already taken similar steps, making this shift a move toward international alignment. At present, only professional investors in the UK are permitted to access crypto ETNs.

FCA Seeks Market Growth While Protecting Crypto Consumers

Under the new proposal, individual consumers would be able to trade these products via recognised investment platforms, but only within a tightly controlled regulatory environment. Clear risk disclosures would be mandatory, and advertising rules would be made consistent with those already applied to direct purchases of crypto assets.

The regulator explained that this consultation is part of its effort to strengthen the competitiveness and growth of the UK’s crypto market. It noted that rethinking the current risk approach could give people the freedom to decide whether or not to engage in what remains a high-risk area, where investors must understand they could lose the entire amount they put in.

While the FCA is considering loosening rules on crypto ETNs, it is maintaining its cautious approach. The ban on retail investors accessing crypto asset derivatives will remain unchanged for now.

The regulator continues to keep a close watch on the market and remains firm in its commitment to protecting consumers from potentially harmful financial products. This proposal fits within the FCA’s broader goal to establish a clear and comprehensive set of rules for crypto assets.

It builds upon earlier discussions on topics like stablecoins and other planned regulatory measures, all aimed at encouraging responsible innovation in the crypto sector.

FCA Wants To Ease Regulatory Burdens While Supporting Innovation

In its latest consultation report, the FCA also proposed a number of broader regulatory reforms intended to reduce burdens across the financial industry. These include streamlining the reporting obligations for firms assessing fund value, which is expected to bring down costs for nearly 150 asset managers overseeing thousands of investment funds.

Additionally, the FCA wants to eliminate the need for firms to submit data it considers unnecessary, which would benefit a wide range of businesses in the sector. Altogether, these proposals illustrate the regulator’s dual objective: to foster innovation and market expansion while continuing to uphold investor protections.

The Financial Conduct Authority (FCA) serves as the independent financial regulator in the UK. Though not part of the government, it funds its operations by charging fees to financial firms. It oversees businesses that provide financial services to the public, ensuring fair conduct and safeguarding the soundness of the UK’s financial markets. The FCA’s focus spans both retail and wholesale sectors.

Like its forerunner, the Financial Services Authority (FSA), the FCA is organised as a company limited by guarantee. It works closely with both the Prudential Regulation Authority and the Financial Policy Committee to establish and enforce rules for the financial system.

The FCA oversees the behaviour of around 58,000 businesses, which collectively employ more than two million people and contribute a significant amount of tax revenue to the UK economy.