The UK Financial Conduct Authority (FCA) is erasing its ban on crypto-based Exchange Traded Notes (ETNs) as government policy aims to support digital asset innovation.
ETNs are different from ETFs in the US. A breakdown of the assets is available here.
In a release, David Geale, executive director of payments and digital assets at the FCA, stated:
“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. 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.”
The fact that in other countries similar products are widely available helped to drive the decision to move forward in the UK.
In general, the UK is a top global Fintech hub, and it is critical that the country keeps up with the rapidly developing digital asset ecosystem. The government has expressed its interest in becoming a top crypto hub.
The FCA noted that its ban on retail access to cryptoasset derivatives will remain in place as it navigates offerings deemed to be high risk.
The FCA stated that “cETNs” could be sold to individual consumers in the UK if they’re traded on an FCA-approved exchange. In March 2024, the FCA said it would not object to requests from exchanges to create a UK-listed market segment for cETNs for professional investors. This is an expansion of that decision.
The UK is pursuing various regulatory updates to accommodate digital asset markets, including the hot stablecoin sector.