- The UK’s FCA announced that retail investors will have access to crypto ETNs starting October 8.
- The move aims to give customers more choices when diversifying their investment portfolios.
- The retail ban on crypto derivatives still applies.
The UK’s Financial Conduct Authority (FCA), recognizing the changing landscape of the cryptocurrency market and demand for investment products based on them, has lifted the rule restricting retail investors’ access to crypto exchange-traded notes (ETNs) of cETNs. The rule change will take effect on October 8 this year.
Reason for the FCA’s Rule Change on Crypto ETNs
According to David Geale, executive director of payments and digital finance at the FCA, the market has significantly evolved since the launch of crypto ETNs in the UK. More people are also starting to understand the potential benefits and risks of investing in these products.
“Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” said Geale in the agency’s press release.
As a result, the FCA has rescinded the ban to allow retail participation access to crypto ETNs. This way, they will have more choices when diversifying their investments.
The regulator stated that it would still enforce measures to protect investors. However, it would be up to people to determine their risk portfolios and trading strategies.
“In light of this, we’re providing consumers with more choice, while ensuring there are protections in place,” the official added. “This should mean people get the information they need to assess whether the level of risk is right for them.”
In addition, the agency reminded investors to only trade within FCA-approved platforms. The same entities must also be a Recognized Investment Exchange (RIE).
Moreover, the FCA noted that financial promotion rules and Consumer Duty provisions still apply to companies offering crypto ETNs. The measure aims to provide an avenue for consumers to get the right information and avoid the pitfalls laid down by “inappropriate incentives to invest.”
The FCA’s retail ban on crypto derivatives and ETNs goes as far as January 2021. In March 2024, it greenlit the launch of crypto ETNs on recognized stock exchanges, but with the same restrictions in place.
Crypto Derivatives Ban and Regulatory Framework
Despite the latest developments, the FCA’s retail ban on crypto asset derivatives still applies. The regulator claimed it will continue to monitor the high level of risk tied to these investments.
Furthermore, the agency revealed that it will continue to craft clearer regulatory frameworks for crypto. Lately, it has been working on several proposals tailored toward the regulation of stablecoins, similar to the purpose of the EU’s Markets in Crypto-Assets (MiCA) regulation and the USA’s GENIUS Act.
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