UK Lifts Ban on Crypto ETNs, Opening Market to Retail Investors

2 mins mins

In Brief

FCA allows retail trading of crypto ETNs on approved UK exchanges from Oct 8.
17 ETNs from issuers like WisdomTree and Fidelity now open to retail investors.
Move aligns UK with U.S. and Hong Kong, boosting crypto adoption and liquidity.

The UK’s Financial Conduct Authority (FCA) has officially lifted its ban on cryptoasset exchange-traded notes (cETNs) effective October 8. The decision allows retail investors to trade crypto-linked products on recognized UK exchanges such as the London Stock Exchange under strict financial promotion and Consumer Duty regulations.

The FCA originally banned the sale, marketing, and distribution of crypto derivatives and ETNs to retail consumers in January 2021. However, it stated that the crypto market has become “more mainstream and better understood,” warranting a controlled reopening of access for individual investors.

The approved ETNs will operate as debt instruments backed 1:1 by digital assets, functioning more like bonds than exchange-traded funds (ETFs). While offering retail access, these products remain outside the Financial Services Compensation Scheme (FSCS), meaning investors will bear full market risk.

Unlike U.S. spot Bitcoin ETFs launched in early 2024, UK-listed ETNs do not directly hold the underlying assets but track their performance. The FCA emphasized ongoing monitoring to ensure compliance, especially amid rising retail participation and increased trading volumes on UK exchanges.

Market Reaction and Growing Investor Interest in Digital Assets

There are currently 17 crypto ETNs listed on the London Stock Exchange from issuers including WisdomTree, Fidelity, and Invesco. These products were previously restricted to institutional investors, but the rule change now opens them to retail traders across the country.

Analysts expect a surge in participation, particularly among younger investors already comfortable with digital assets. Data from the FCA indicates that about 12% of UK adults held or have held crypto, with IG research suggesting the figure has now risen to 25%.

Market participants anticipate higher liquidity and broader adoption following the policy reversal, which aligns the UK with global financial centers such as the U.S., Hong Kong, and Australia.

Industry experts believe the move will strengthen London’s status as a competitive crypto investment hub, driving further innovation and regulated digital asset growth in 2025.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.