UK FCA Lifts Ban on Crypto ETNs for Retail Investors
By: Eliza Bennet
The UK Financial Conduct Authority (FCA) has lifted its previous ban on crypto exchange-traded notes (cETNs) for retail investors, a move that is set to take effect from October 8, 2025. This decision marks a significant policy shift, as the ban was initially implemented in January 2021 due to concerns over the volatility and risks associated with these financial products. The FCA's reassessment aligns with the global trend of widening access to digital asset investments.
In its August 1 announcement, the FCA highlighted improvements in the market infrastructure, increased transparency, and a more sophisticated investing public as key reasons for the policy update. The regulator stated that the crypto investment market has matured sufficiently since the ban, allowing for a controlled reintroduction of cETNs. Furthermore, the FCA emphasized the importance of investor education and transparency, urging firms to ensure that their marketing materials remain fair, clear, and not misleading.
Despite opening the doors for retail investment in cETNs, the FCA advises caution. Retail investors will not be protected under the Financial Services Compensation Scheme (FSCS) in case of losses. Therefore, providers of cETNs are required to comply with updated financial promotion rules. This cautious approach aims to strike a balance between investor access and protection, maintaining that crypto derivatives are still too complex for the average retail investor.
This regulatory change is part of the UK’s broader attempt to establish a structured regulatory framework for digital assets. As part of its long-term crypto roadmap, the FCA plans to introduce additional proposals to enhance investor protection and ensure market integrity. This development reflects the UK's strategy to keep pace with global counterparties such as the U.S., where crypto-linked ETFs have swiftly gained popularity, particularly those tied to major cryptocurrencies like Bitcoin and Ethereum.
