FCA Criticized for Blocking Retail Access to Digital Asset ETPs

The Financial Conduct Authority (FCA) has been criticized for its conservative stance on digital asset exchange-traded products (ETPs), which has prohibited UK retail investors from accessing digital assets through regulated, exchange-traded products. The FCA's reasons for this prohibition include challenges in assessing the true value of digital assets, the high prevalence of cybercrime, extreme volatility, and the lack of a legitimate investment need for cryptocurrencies.

However, these arguments are increasingly outdated as digital assets enter the mainstream and over 500 million people use them globally for reasons beyond mere speculation. Many traditional asset classes, such as early-stage venture capital, art, and commodities, face similar challenges in valuation but are still accessible to retail investors. Cryptocurrencies, particularly those with established utility or monetary properties like Bitcoin, have transparent, auditable supply mechanisms and globally liquid markets that support valuation frameworks based on adoption, scarcity, and usage.

Critics have long pointed out the potential for digital currencies to be used for nefarious means. While this was true in the past, illicit activity in cryptocurrency markets has declined and is often more traceable due to the blockchain’s transparency. Major ETPs operate on regulated exchanges with institutional-grade custodians and compliance measures, making cryptocurrency transfers more traceable than cash transactions.

Volatility is another concern cited by critics, but it is not unique to cryptocurrencies and exists across many retail-accessible asset classes, such as leveraged ETFs or emerging market equities. Volatility and its accompanying risks do not merit exclusion from retail investors, especially when access is through diversified and professionally structured ETPs with transparent risk disclosures.

A more addressable criticism is the lack of education and understanding among retail customers on how to invest in these products. Investor education should be a regulatory priority, not a reason for exclusion. Many retail investors routinely allocate to complex products under regulated advice or self-direction. Crypto ETPs offer a familiar, regulated wrapper for exposure, simplifying access and removing custody and technical barriers, thereby improving—not reducing—investor understanding.

The final criticism is that blockchain technology and cryptocurrencies are a “solution in search of a problem” and that there’s no legitimate investment need. Defining what constitutes a “legitimate need” is highly paternalistic and inconsistent with free-market principles. Retail investors may seek portfolio diversification, long-term growth, or a hedge against monetary debasement—all of which cryptoassets can potentially provide. The demand is clear: UK investors already access crypto through offshore platforms, often at greater risk.

The current status quo from the FCA is untenable. There are 7 million retail investors/users in the UK alone, and they can currently only access offshore platforms and unregulated products where corporate governance and compliance levels vary hugely. This technology has proven itself to be more than just a fad; it is now pervasive throughout every sector and industry globally. Digital Assets and blockchain technology sit at the nexus of multiple mega trends such as the digitisation of money, Agentic AI, energy grid optimisation, and tokenization of real-world assets. Retail investors are right to want to support the Web3 economy and future growth of these markets; the FCA should provide them the guidelines and protection they’re crying out for.