FCA Proposes Retail Access to Crypto Exchange Traded Notes in Boost to UK Competitiveness

The Financial Conduct Authority (FCA) has announced a landmark consultation proposing the lifting of its ban on crypto exchange traded notes (cETNs) for retail investors, marking a pivotal shift in the UK’s approach to digital asset regulation.

If enacted, this would permit individual consumers to purchase cETNs — structured financial products that track the performance of cryptoassets — through recognised investment exchanges (RIEs) approved by the FCA. Currently, such products are limited to professional investors, but they are already widely accessible to retail investors in several overseas markets.

Under the proposed changes, cETNs would be subject to stringent financial promotion rules. This includes mandatory disclosures about the high-risk nature of crypto investments and prohibitions on misleading incentives. The framework mirrors requirements already in place for firms offering direct cryptoasset exposure to consumers.

David Geale, executive director of payments and digital finance at the FCA, said:

This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.

Continued Regulatory Evolution for Crypto

The proposal to reintroduce retail access to cETNs forms part of the FCA’s broader roadmap for crypto regulation. It follows recent publications on the regulation of stablecoins and a suite of consultations aiming to establish a robust, proportionate regime for crypto-related financial products and services.

Despite this proposed liberalisation, the FCA’s prohibition on retail trading of cryptoasset derivatives will remain firmly in place. The regulator has reaffirmed its commitment to monitor market behaviour and maintain a cautious stance on high-risk investments.

Supporting Growth & Reducing Regulatory Burden

The FCA’s quarterly consultation also includes wider deregulatory measures aimed at supporting UK economic growth. These include:

• Simplifying reporting obligations for funds’ assessment of value exercises, projected to deliver material cost savings for 149 asset managers overseeing more than 3,900 funds.

• Reducing unnecessary data reporting across the board, benefitting nearly all regulated firms by easing administrative burdens.

Together, these proposals signal a shift towards a more flexible, innovation-friendly regulatory environment that balances consumer protection with market development.

Read the press release here.