UK proposes lifting ban on ‘crypto’ ETNs for retail investors

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The Financial Conduct Authority (FCA), the United Kingdom’s top finance sector regulator, is proposing to lift a ban on crypto exchange-traded notes (cETNs) for retail investors in a move to bring the country more in line with international peers.

As things stand, only professional investors are permitted to access these digital asset investment products in the U.K. But in its latest consultation, the regulator proposed allowing individual consumers to access cETNs, provided they are traded on an FCA-approved investment exchange (a recognized investment exchange or RIE).

In a June 6 press release, the regulator said the move would “support UK growth and competitiveness,” while bringing the country more in line with other jurisdictions such as the U.S., Canada, Hong Kong, and EU.

The announcement came alongside other proposals outlined in a quarterly consultation paper from the FCA, aimed at further reducing burdens on firms and supporting economic growth.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, executive director of payments and digital finance at the FCA. “We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

ETNs are a type of bond issued by a bank whereby they promise to pay the investors a return of a specific index minus fees. Unlike spot Bitcoin exchange-traded funds (ETFs)—the subject of much-frenzied debate and investment last year after the first Bitcoin ETF went live in January—ETNs do not directly hold assets.

In other words, with ETFs, you own real assets, but with ETNs you rely on the issuer’s promise, so there is potentially a heightened risk if the issuer fails.

Since January 2021, the FCA has prohibited the sale, marketing, and distribution of digital asset derivatives and cETNs to retail consumers “due to the harm they pose”—this applied to all U.K.-regulated platforms and brokers. In March 2024, the regulator updated its policy to allow cETNs for professional investors only, such as investment firms and credit institutions authorized or regulated to operate in financial markets.

As of last Friday, the FCA appears to have had another change of heart on these products, floating the possibility of permitting them for individual investors.

The FCA did not specify a timeline for when the proposed ETN changes might take effect.

FCA regulatory push

The proposed ETN update is just the latest step on the FCA’s “crypto roadmap” towards a full regulatory framework for digital assets, following recent proposals on stablecoins.

With the final provisions of the European Union’s Markets in Crypto Assets (MiCA) regulation coming into force in January, followed the same month by pro-crypto President Donald Trump taking office in the United States—in turn initiating a swathe of legislative efforts and innovation-friendly regulatory appointments in the country—the U.K. has been ramping up its regulatory efforts in response.

In April, the Chancellor of the Exchequer, Rachel Reeves, confirmed that the government plans to follow through on its predecessor’s pledge to make the U.K. a digital asset hub.

“Through our Plan for Change, we are making Britain the best place in the world to innovate — and the safest place for consumers,” said Reeves in an April 29 statement. “Robust rules around crypto will boost investor confidence, support the growth of Fintech and protect people across the U.K.”

This commitment was likely influenced by recent reports indicating that the U.K. is leading the world in increasing digital asset ownership among its population in 2025, outpacing even the U.S. and Singapore.

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