UK Lifts Ban on Cryptocurrency ETNs for Retail Investors

The United Kingdom's Financial Conduct Authority (FCA) has proposed lifting the ban on the sale of cryptocurrency exchange-traded notes (ETNs) to retail investors. This move marks a significant shift in the UK's digital asset regulatory policy. ETNs are debt instruments linked to specified assets, in this case, cryptocurrencies. Essentially, they allow investors to gain exposure to digital tokens through regulated exchanges.

Since 2019, the sale of cryptocurrency ETNs to retail investors has been prohibited in the UK due to concerns about potential harm to consumers. However, the regulatory body has stated that this proposal aims to "support the UK's growth and competitiveness," although restrictions on cryptocurrency derivatives will remain in place.

David Geale, the FCA's Executive Director of Payments and Digital Assets, commented on the proposal, highlighting the UK's perceived lag behind the US, the EU, and other global participants in the digital asset space. Cryptocurrency exchange-traded products (ETPs) have been listed on European exchanges for a decade, but the market has been quickly overtaken by similar US products introduced at the start of last year. Currently, the scale of spot cryptocurrency ETFs traded in the US exceeds 1300 billion, approximately eight times the total value of European ETPs.

In April of this year, the UK government released a legislative draft for the cryptocurrency industry, aiming to make the country a "world leader in the digital asset field." The FCA is independently developing a detailed consultation and discussion document roadmap, with plans to implement cryptocurrency regulations by 2026.

Industry reactions have been swift and positive, with cryptocurrency companies praising the development as a significant milestone for the UK industry. Ian Taylor, a board advisor for the cryptocurrency organization CryptoUK, expressed support for the move. Bivu Das, the UK General Manager of Kraken, described the proposal to allow the sale of cryptocurrency ETNs to consumers as a "major milestone" for the UK's cryptocurrency ecosystem. Das added that this step would help the UK catch up with other global financial centers and become a leading hub for digital assets.