On June 6, 2025, the UK’s Financial Conduct Authority (FCA) proposed to lift its long – standing ban on crypto – exchange – traded notes (ETNs) for retail investors, opening the door to broader access to regulated crypto exposure through public investment exchanges. This move is part of a broader regulatory push to enhance market competitiveness and reduce barriers for financial firms.
Retail investors would be allowed to purchase crypto ETNs, which are debt instruments tied to digital asset prices, if these are listed on a recognized investment exchange and meet the UK’s financial promotion rules. The FCA emphasized that safeguards would still apply, including requirements for risk disclosures and restrictions on promotional incentives, similar to the rules for direct digital asset sales.
Notably, the FCA’s proposal does not extend to spot crypto ETFs. Spot ETFs, which directly hold crypto (e.g., Bitcoin) as the underlying asset, are not currently permitted in the UK and remain subject to broader regulatory and legislative constraints. The FCA has not proposed changes in this regard, and ETNs are the FCA’s chosen compromise for retail exposure under tight oversight for now.
The trading experience of ETNs will be similar to that of an ETF, with a ticker on an exchange and intraday liquidity. However, the instrument will remain a note, with counterparty risk to the issuer and no direct title to the underlying coins.
The consultation reverses the FCA’s 2021 policy of barring retail access to crypto ETNs and derivatives. While the retail ban on crypto derivatives will remain in force, the regulator’s latest stance reflects its evolving attitude towards high – risk investments and its intention to give consumers more autonomy in choosing investment products. According to FCA Executive Director David Geale, the shift represents an effort to “rebalance” the regulator’s risk framework, allowing retail participants to decide whether such investments align with their risk tolerance.
The change follows a March 2024 update in which the FCA said it would not object to UK exchanges launching dedicated market segments for crypto ETNs aimed at professional investors. The new proposal would extend this access to retail customers, provided the products are listed on an FCA – recognized venue, such as the London Stock Exchange, and comply with investor protection mandates.
The announcement is accompanied by the FCA’s broader quarterly consultation, which includes measures to simplify reporting obligations for asset managers and reduce unnecessary data collection across regulated firms. These measures aim to ease the compliance burden for traditional financial services, while the crypto ETN proposal is more directly in line with the UK Treasury’s ambition to position the country as a global hub for digital asset innovation.
The proposed change would bring the UK closer to the regulatory stance adopted by the European Union, where crypto ETNs are widely available to retail investors on exchanges such as the Deutsche Börse’s Xetra platform and Euronext. There are currently over 300 crypto – linked ETNs listed on Xetra, and issuers such as 21Shares and VanEck have expanded their offerings to include assets like Solana and Pyth. In contrast, the US has prioritized spot – based Bitcoin ETFs over the ETN structure, and crypto ETNs are largely absent from public markets there.
The consultation remains open until July 31. If approved, the change would allow UK – based investors to access crypto ETNs under regulated conditions, a shift expected to reshape retail participation channels without overturning the FCA’s ban on derivatives. By distinguishing between the two instruments, the FCA seems to be adopting a more nuanced approach to crypto regulation, aiming to balance market growth with consumer protection within the existing legal framework.
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