FCA proposes lifting retail ban on crypto exchange-traded notes to boost UK crypto market

UK’s Financial Conduct Authority (FCA) has proposed lifting the ban on crypto exchange-traded notes (cETNs) to retail investors. FCA said the proposed change would allow individual consumers to access crypto ETNs, provided the products are listed on FCA-recognized exchanges. 

The regulator revealed that the move aims to support the growth of the UK’s crypto industry. The agency also acknowledged that its promotion rules will still apply. The restriction has existed since 2021 and previously limited access to professional investors only.

FCA’s proposal aims to support crypto in the UK

🇬🇧 The FCA will lift the ban on Bitcoin and crypto ETNs for retail investors in the UK! pic.twitter.com/WGXPqTx0Y8

— Jordan Walker (@JayW132) June 6, 2025

The FCA began prohibiting the selling, marketing, and distribution of crypto derivatives and crypto ETNs to retail customers in 2019. The regulator updated its position in March 2024 to allow RIEs to list crypto asset-backed ETNs for professional investors only – restricted to entities such as investment firms and credit institutions. It also added stringent controls to ensure orderly trading and investor protection.

Ian Taylor, board advisor at CryptoUK, noted that the UK had been an outlier on ETNs till its recent lift on the ban. He hopes the move will improve consumer protections and promised to continue making the case for lifting the ban on retail investors from accessing highly regulated derivative products.

Diego Ballon Ossio, partner at British law firm Clifford Chance, argued that the agency’s initiative is aligned with the UK’s ambition to position itself as a sophisticated jurisdiction in the crypto sector. He also noted that the move will unlock exposure to crypto assets for retail investors and signal that the UK is embracing digital assets. 

“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.”

-David Geale, Executive Director of Payments and Digital Assets at FCA.

The UK Treasury acknowledged that crypto exchanges will be regulated similarly to traditional financial firms under the proposed rules, with transparency, consumer protection, and operational resilience requirements. The regulator also maintained that its rules aim to ensure regulated stablecoins maintain their value, irrespective of the value of the backing asset. FCA also urged customers to ensure they know how backing assets are managed. 

The agency is also working on a new version of its crypto regulatory framework. FCA requested public feedback on proposed stablecoins and cryptocurrency custody regulations last week. Geale said the regulator supports innovation while ensuring market integrity and trust. FCA also noted that the deadline for feedback is July 31, and it will publish the final rules in 2026

Bank of England Deputy Governor Sarah Breeden noted that the Bank of England will publish a complimentary consultation paper later this year for stablecoins that expect to operate at a systemic scale. UK Chancellor of the Exchequer Rachel Reeves also suggested plans for a comprehensive regulatory regime to make the country a leader in the crypto space.

UK wants to become a global crypto hub

Data revealed that the UK is leading the world in increasing cryptocurrency ownership among its population in 2025, surpassing economies such as the U.S. Jamie Jefferson, senior associate at law firm Ashurst, mentioned that the FCA’s latest proposals are a bold step toward making the UK a hub for responsible crypto innovation. Another UK law firm, Wiggin, suggested that the UK is applying the full weight of securities regulation to digital assets rather than opting for a light-touch regime similar to the EU’s Markets in Crypto-Assets Regulation (MiCA).

The government agency also introduced new requirements for companies providing crypto custody to ensure they are secured and can be easily accessed at any time. The proposal also seeks to reduce the likelihood and impact of firm failures across regulated companies offering stablecoin issuance and digital asset custody.

The Cabinet Office Minister Pat McFadden argued during the UK House of Commons debate that as finance evolves, so must the rules to ensure transparency in elections. Member of Parliament Sarah Olney highlighted concerns over political parties accepting crypto donations.

Olney stressed the need to ensure that donations that do not come from an identifiable source must be returned. Nigel Farage, leader of the Reform UK party, had previously announced that the party accepts cryptocurrency contributions from eligible donors.

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