The Financial Conduct Authority has signalled a major policy shift by proposing to scrap its ban on retail investors accessing crypto-linked exchange-traded notes (ETNs). The move marks a significant departure from the regulator’s historically cautious stance and aligns with the government’s ambition to position Britain as a global hub for digital assets.
Since 2021, the FCA has barred everyday investors from trading crypto ETNs, citing extreme volatility and the risk of substantial losses. The restriction remained in place even as institutional investors gained access last year. However, the regulator now argues that the market has evolved, justifying a more balanced approach to risk management. David Geale, the FCA’s Director of Payments and Digital Assets, stated that retail investors should be permitted to make their own assessments, provided they understand the potential to lose their entire investment. The proposal will now undergo public consultation before finalisation.
Under the new framework, crypto ETNs will only be tradable on FCA-approved exchanges, maintaining some safeguards. Notably, the ban on retail cryptocurrency derivatives—such as futures and options—will stay intact, reflecting lingering concerns over speculative trading. The decision comes amid broader regulatory efforts, including a Treasury-led push to bring stablecoins and custody services under formal oversight. Unlike the EU’s rigid Markets in Crypto-Assets (MiCA) regime, the UK’s approach mirrors the US model, prioritising market flexibility while mitigating consumer harm.
Industry leaders have welcomed the development. Diego Ballon Ossio, a financial regulation partner at Clifford Chance, described it as a strategic step toward legitimising crypto markets without stifling innovation. Bivu Das, CEO of Kraken UK, went further, calling the move a “milestone” that acknowledges the sector’s maturation. Ian Taylor of CryptoUK echoed these sentiments, emphasising the need for clear rules to protect investors while fostering growth.
The policy shift coincides with surging retail interest in cryptocurrencies. Recent data ranks the UK among the world’s top adopters, outpacing even the US in per-capita ownership. Yet the debate extends beyond markets: political tensions flared last week after Reform UK, led by Nigel Farage, began accepting Bitcoin donations—a decision critics argue could undermine campaign finance transparency.
