The UK’s Financial Conduct Authority (FCA) is set to soon reverse a ban on crypto exchange-traded notes (ETNs) for retail investors enacted in 2019.
According to an Aug. 1 notice, the UK watchdog will lift a ban on retail access to crypto ETNs starting on Wednesday, provided they are traded on an “FCA-approved, UK-based investment exchange.” Unlike exchange-traded funds (ETFs), which are still banned in the UK for retail investors, ETNs represented debt securities tied to crypto and not backed by any underlying assets.
With the lifting of the ban looming, companies with operations in the UK have been weighing in on what the regulatory change could mean for retail investors. BlackRock, the world’s largest asset management company, is reportedly looking into ways to offer its iShares Bitcoin exchange-traded product to prepare for retail trading on or after Oct. 8.
Bitwise CEO Hunter Horsley, whose company’s European operations are headquartered in London, said on X that he was “excited to be able to serve more investors in our home market in Europe at long last.”
“Until now, the UK has been an outlier on ETNs,” Ian Taylor, board adviser to the digital assets trade association CryptoUK, told Cointelegraph. “We hope this move will improve consumer protections and we will continue to make the case for lifting the ban on retail investors from accessing highly-regulated derivative products.”
According to an August notice from the FCA, any asset manager planning to offer trading of ETNs to UK retail investors had to have them listed on a “Recognised Investment Exchange.” The decision followed consultations with companies, trade associations, and consumer groups.
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Companies’ offerings reportedly delayed
Companies with operations in the UK, like CoinShares and Bitwise, will be able to offer exchange-traded products with exposure to digital assets. However, the Financial Times reported that retail investors could have to wait up to a week before being able to trade, in part due to the FCA only beginning to accept prospectuses on Sept. 23, two weeks before lifting the ban.
The regulator will likely have to review offerings from companies and follow up with any potential comments or concerns.
As of Friday, the FCA had made no moves suggesting that it was planning to lift a similar ban on ETFs or crypto derivatives for retail investors.
“While several respondents called for retail access to cryptoasset ETFs, ETFs marketed to UK retail investors are unable to invest directly into cryptoassets under our current regulatory framework for funds,” said the FCA in its August notice lifting the ETN ban. “This framework would need to be updated before retail investors could access cryptoasset ETFs.”
In contrast, spot cryptocurrency-tied ETFs have been available for trading in the US since being approved by the Securities and Exchange Commission in January 2024. The agency is currently operating with restrictions after US lawmakers failed to pass a bill to fund the government beyond Oct. 1, limiting its ability to review any crypto ETFs.
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