The UK’s Financial Conduct Authority (FCA) has proposed lifting its longstanding ban on retail investors buying exchange-traded products (ETPs) tied to cryptocurrencies.
The move comes as part of an effort to revitalize Britain’s crypto competitiveness and better align the market with the United States, where crypto ETFs have surged in popularity under the Trump administration.
If implemented, the new rules would allow retail investors access to exchange-traded notes (ETNs) backed by cryptocurrencies like Bitcoin and Ether, provided they are listed on FCA-approved exchanges.
These products have so far been restricted to professional investors despite being tradable on venues like the London Stock Exchange since last year.
US market pressure drives policy shift
The FCA’s policy rethink comes as crypto investment products have gained rapid traction in the US.
Spot Bitcoin ETFs, introduced there in early 2024, now manage over $130 billion in assets — a figure that dwarfs the combined $16 billion under management by European crypto ETPs.
That disparity has intensified pressure on UK regulators to support innovation and prevent the country from falling further behind.
Source: Bloomberg
“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, the FCA’s executive director of payments and digital assets.
“We want to rebalance our approach to risk and allow people to make the choice on whether such a high-risk investment is right for them.”
The FCA’s ban on retail access to cryptoasset derivatives will remain in place.
FCA’s change in stance regarding crypto
The proposal represents a notable departure from the regulator’s past messaging.
In 2021, the FCA warned retail consumers that investing in cryptocurrencies and related products could lead to total financial loss.
“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product, they should be prepared to lose all their money,” the FCA had said in a dire warning.
At the time, the watchdog said such investments were too risky and not protected by the Financial Ombudsman Service or the Financial Services Compensation Scheme.
While those warnings remain valid, the FCA now appears to be signaling a shift toward giving retail investors more autonomy, albeit with full awareness of the risks.
FCA to lift ban on crypto ETNs
Tremendous news today that since we first met with HMT several years ago, the FCA has now announced its intention to lift the ban on offering crypto ETNs to retail investors. Lifting the ban will enable ETNs to be sold to retail clients by FCA
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Wider regulatory reform underway
The proposal is part of a broader effort by the UK government to craft a comprehensive regulatory regime for digital assets.
Finance Minister Rachel Reeves has said the country aims to become a “world leader in digital assets” and emphasized that regulation should support innovation rather than hinder it.
Draft legislation introduced in April outlines a framework that would bring exchanges, brokers, and crypto service providers into the regulatory fold.
The Treasury said the forthcoming rules would crack down on bad actors while offering legitimate firms a clearer path to compliance.
The regulator has outlined its crypto roadmap and recently published proposals on stablecoins as well as other aspects of the regime.
The FCA’s consultation on lifting the retail ETP ban is expected to conclude later this year, with final rules anticipated in 2025.
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