The UK government has finally lifted its ban on crypto exchange-traded notes, citing a maturation of the industry and a greater understanding of digital asset products.
In an announcement on Wednesday, the Financial Conduct Authority (FCA) outlined that retail investors can now access crypto ETNs via FCA-approved exchanges based in the UK
A crypto exchange-traded note is a debt product that allows an investor to gain exposure to a cryptocurrency without owning the underlying asset. These types of products are essentially traded similarly to any other security, with underlying crypto held securely by regulated custodians.
“Since we restricted retail access to crypto ETNs, the market has evolved, and products have become more mainstream and better understood. In light of this, we’re providing consumers with more choice, while ensuring there are protections in place,” said David Geale, FCA executive director of payments and digital finance, as part of the announcement.
The crypto ETN ban initially went into effect in January 2021, with the FCA stating that it considered “these products to be ill-suited for retail consumers due to the harm they pose.” It also argued that there was a “lack of legitimate investment need” for these crypto products at the time.
The latest move by the FCA marks a significant shift in tone, as the government has gradually warmed to the crypto space over the past few years. The country is awaiting the rollout of a comprehensive framework following a government leadership change in July.
As part of the announcement, the FCA also said that its ban on “retail access to cryptoasset derivatives will remain in place,” adding that it will continue to keep an eye on “market developments and consider its approach to high-risk investments.”
Crypto ETNs allowed in retirement funds
Alongside lifting the crypto ETN ban, the UK government also released a policy statement on the tax treatment for these crypto products in specific types of tax-efficient investment accounts.
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From Oct. 8, the government will allow crypto ETNs to be held in “registered pension schemes,” and from April 2026 will open up access for Stocks & Shares Individual Savings Accounts, meaning the citizens will have a few tax-incentivized investment options for these products.
“The government remains supportive of the UK’s growing cryptoasset sector and continues to develop a comprehensive regulatory framework that fosters innovation while protecting consumers,” the statement reads.
Market set for growth with crypto ETNs
A recent research report by IG Group predicts “The UK crypto market could grow by up to 20%” following the relaunch of crypto ETNs.
The report based this prediction on its own research that found that “30% of UK adults would consider investing in crypto via ETNs,” with the main appeal being the “perceived safety and regulatory oversight” offered by these products.
“This represents a significant potential uplift from current levels of crypto ownership – 12%, according to the FCA’s latest study, and 25% according to IG’s new study.”
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