Cryptocurrency Exchange-Traded Notes (ETNs) Unbanned by UK's Financial Conduct Authority, Yet High Risks Are Indicated

Cryptocurrency Exchange-Traded Notes (ETNs) Unbanned by UK's Financial Conduct Authority, Yet High Risks Are Indicated

UK Retail Investors to Gain Access to Crypto Exchange-Traded Notes (cETNs) from October 2025

Starting October 8, 2025, retail investors in the United Kingdom will be able to participate in the crypto market by trading crypto exchange-traded notes (cETNs), as announced by the Financial Conduct Authority (FCA) [1][2][3]. This decision marks a significant shift in the UK's regulatory stance towards cryptocurrencies, following years of strict limits [1].

The FCA's decision to lift the retail ban on cETNs, which had been in place since 2021, was made after a thorough consultation process [1]. On June 6, 2025, the FCA published a Consultation Paper (CP25/16) proposing to lift the retail ban and categorize cETNs admitted to trading on a UK Recognised Investment Exchange (RIE) as Restricted Mass Market Investments (RMMIs) [1]. The deadline for comments on the consultation was July 7, 2025, and the FCA Board approved the Conduct of Business (Cryptoasset Products) Instrument 2025 on July 31, 2025 [1]. The instrument was set to come into force on October 8, 2025 [1][2].

The new rules will allow firms to sell, market, and distribute cETNs to retail clients, but only if the cETNs are admitted to trading on a UK RIE and meet specific compliance standards [1][2][3]. cETNs will be categorized as RMMIs, which triggers certain marketing restrictions such as risk warnings to retail investors and appropriateness testing to assess if the product suits the client [1].

The FCA's Consumer Duty, including obligations to act to deliver good outcomes for retail consumers and to avoid foreseeable harm (Principle 12 and PRIN 2A.2.8R), will also apply to firms offering cETNs [1]. Product manufacturers must define and specify a target market to ensure that the product design meets the needs, characteristics, and objectives of that market, and firms must take reasonable steps to distribute the product only to the target market [1].

cETNs must be listed and traded on UK-based RIEs, providing an additional layer of transparency and regulatory oversight that aims to mitigate risks associated with unregulated trading platforms [2][3]. The FCA maintains a ban on retail access to crypto derivatives, considering them too volatile and complex for retail consumers [2][3].

In summary, the FCA's phased approach reflects a balance between enabling retail access to regulated crypto investment products like Bitcoin-linked cETNs with strong investor protections, transparency, and controls in place to mitigate risks commonly associated with cryptoassets [1][2][3]. The regulator will continue monitoring market developments and may adjust rules if new risks arise [3].

Retail investors are encouraged to understand the high risks associated with investing in crypto ETNs before participating in the market.

[1] Financial Conduct Authority. (2025). Consultation Paper 25/16: Cryptoassets: Policy Statement PS25/16. Retrieved from https://www.fca.org.uk/publications/policy-statements/cryptoassets-policy-statement-ps25-16

[2] Financial Conduct Authority. (2025). Press release: Retail investors to be able to buy crypto exchange-traded notes. Retrieved from https://www.fca.org.uk/news/press-releases/retail-investors-to-be-able-to-buy-crypto-exchange-traded-notes

[3] Financial Conduct Authority. (2025). Handbook: Conduct of Business Sourcebook. Retrieved from https://www.fca.org.uk/regulation/handbook/handbook-changes/hc2025-1/handbook-changes-hc2025-1-conducted-business-sourcebook-cob-sourcebook

Starting October 8, 2025, retail investors in the United Kingdom will be able to invest in Bitcoin and other cryptocurrencies through the trading of crypto exchange-traded notes (cETNs). This decision by the Financial Conduct Authority (FCA) follows a removal of the retail ban on cETNs and classifies them as Restricted Mass Market Investments (RMMIs), subject to specific compliance standards.

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