02.08.2025 04:00

The UK's Financial Conduct Authority (FCA) has reversed its 2021 ban on retail access to cryptocurrency exchange-traded notes (cETNs), marking a significant shift in the country's crypto regulatory landscape. This decision, effective October 8th, allows UK firms to once again offer cETNs to retail investors. The FCA's announcement cites market evolution and increased consumer understanding of these instruments as justification for the change.

David Geale, the FCA's executive director of payments and digital finance, explained the rationale behind the reversal, highlighting the maturation of the market and the improved comprehension of cETNs among consumers since the initial ban. This contrasts sharply with the FCA's previous concerns regarding extreme volatility and a perceived lack of legitimate investment need for retail investors in crypto assets.

Unlike crypto exchange-traded funds (ETFs) which hold underlying crypto assets, cETNs are debt securities representing an obligation from an issuer, not direct ownership of the asset. As described by internet sources, each traded note is essentially a promise by a legal entity holding the corresponding crypto assets as collateral. This crucial distinction highlights the inherent risks and differences between various crypto investment vehicles.

While offering investors exposure to cryptocurrencies through traditional brokerage accounts, ETNs present inherent risks, including limited asset control. Therefore, it's crucial to choose reputable institutions when investing in these instruments, as indicated by information from internet sources.

Despite this significant regulatory alteration, the FCA's stance on crypto derivatives remains unchanged. The ban on retail access to crypto derivatives, implemented concurrently with the cETN ban in 2021, remains in effect. The FCA maintains a watchful eye on market trends and pledges to continually evaluate its approach to high-risk investment products in the crypto space.