The UK government has finally lifted the ban on cryptocurrency exchange-traded notes (ETNs), citing that the industry has matured and there is a deeper understanding of digital asset products.
The Financial Conduct Authority (FCA) of the UK outlined in an announcement on Wednesday that retail investors can now access cryptocurrency ETNs through FCA-approved exchanges within the UK.
Cryptocurrency exchange-traded notes are a type of debt product that allows investors to gain exposure to cryptocurrencies without owning the underlying assets. These products are essentially traded in a manner similar to any other security, with the underlying cryptocurrencies securely held by regulated custodians.
David Geale, Executive Director of Payments and Digital Finance at the FCA, stated in the announcement: "Since we restricted retail access to cryptocurrency ETNs, the market has changed, and the products have become more mainstream and easier to understand. In light of this, we are providing more choices for consumers while ensuring that protections are in place."
The ban on cryptocurrency ETNs was initially implemented in January 2021, when the FCA stated that it believed "these products are not suitable for retail consumers as they pose harm." The agency also noted a "lack of legitimate investment demand" for these cryptocurrency products at that time.
The FCA's latest move marks a significant shift in attitude, as the government has gradually shown a friendlier stance towards the cryptocurrency sector over the past few years. The country is awaiting the rollout of a comprehensive framework following changes in government leadership in July.
As part of the announcement, the FCA also stated that its "ban on retail access to crypto asset derivatives will remain in effect," adding that it will continue to monitor "market developments and consider their approach to high-risk investments."
In addition to lifting the ban on cryptocurrency ETNs, the UK government also released a policy statement regarding the tax treatment of these cryptocurrency products in specific types of tax-advantaged investment accounts.
Starting from October 8, the government will allow cryptocurrency ETNs to be held in "registered pension schemes," and from April 2026, access to stocks and shares individual savings accounts will be opened, meaning citizens will gain some tax-incentivized investment options for these products.
The statement read: "The government continues to support the UK's growing crypto asset industry and is committed to developing a comprehensive regulatory framework that promotes innovation while protecting consumers."
A recent research report by IG Group predicts that the UK cryptocurrency market could grow by as much as 20% with the reintroduction of cryptocurrency ETNs.
This prediction is based on its own research, which found that "30% of UK adults would consider investing in cryptocurrencies through ETNs," with the main appeal being the "perceived safety and regulatory oversight" these products offer.
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Original article: “UK Lifts Ban on Cryptocurrency ETNs, Says ‘Market Has Changed’”
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