The UK government has lifted its ban on crypto exchange-traded notes (ETNs). The Financial Conduct Authority (FCA) announced on Wednesday that retail investors can now access crypto ETNs through FCA-approved UK exchanges.
Crypto ETNs are debt products that let investors gain exposure to cryptocurrencies without owning them directly. They trade like regular securities, with underlying assets securely held by regulated custodians.
David Geale, FCA’s Executive Director of Payments and Digital Finance, said the move reflects the evolution of the market. “Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood. We’re providing consumers with more choice, while ensuring there are protections in place.,” he added.
The FCA initially banned crypto ETNs in January 2021, citing risks to retail investors and a lack of legitimate investment need. Despite lifting the ban, the FCA confirmed that the prohibition on retail access to crypto derivatives remains, with careful monitoring of high-risk products.
In addition to the ban lift, the government declared that crypto ETNs should be taxed favorably in some of the investment accounts.
From October 8, these products can be included in registered pension schemes, and by April 2026, Stocks & Shares Individual Savings Accounts (ISAs) will allow access. This action provides tax-incentivized alternatives to investors to venture in the crypto market with safety.
According to research conducted by IG Group, the UK crypto market may increase by up to 20% after the reintroduction of crypto ETNs. Their study found that 30% of UK adults would consider investing in crypto via ETNs, drawn by perceived safety and regulatory oversight.
This is quite high as compared to the current levels of crypto ownership of 12-25%. The ruling by the FCA is a breakthrough in the UK crypto industry, as it balances innovation and consumer protection and provides retail investors with new opportunities.