- The regulator has maintained restrictions on retail access to crypto derivatives like futures and options, citing their high-risk nature.
- While the UK reopens access to cETNs, the United States is expanding its regulatory framework for crypto ETFs.
The UK’s financial regulator has reversed a years-long stance against crypto-linked investment products, giving retail investors fresh access to cryptocurrency exchange-traded notes (cETNs) after a 2021 ban.
The Financial Conduct Authority (FCA) on Friday confirmed it will allow regulated firms to offer cETNs to retail clients from October 8, signaling a significant policy shift in how the UK approaches retail crypto exposure.
The move follows growing institutional interest in regulated crypto products globally, and a reassessment by UK regulators of the risk-to-benefit ratio for non-professional investors. When it initially banned crypto ETNs and derivatives in January 2021, the FCA cited extreme volatility and a perceived lack of valid investment need.
Now, FCA executive director David Geale acknowledges that the market has moved on. “Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” he said in the regulator’s statement.
However, crypto ETNs come with risks, including limited investor control over the collateral. Industry platforms like Bitpanda stress that such products should be purchased from trustworthy issuers to mitigate counterparty risk.
See Related: London Stock Exchange to Roll out a Market for Bitcoin and Ether ETNs in May
Crypto Derivatives Still Out Of Reach
Despite the regulatory pivot on ETNs, the FCA has made no such move on crypto derivatives. Retail access to products like crypto futures, options, and perpetual contracts remains banned in the UK. The FCA says it will continue monitoring the space before reconsidering its stance on these high-risk instruments.
While the UK reopens retail access to crypto ETNs, the United States has taken a different route—focusing regulatory energy on cryptocurrency ETFs. This week, the U.S. Securities and Exchange Commission gave ETF issuers a green light to perform in-kind creations and redemptions—allowing them to swap ETF shares directly for the underlying crypto.
