- The UK’s Financial Conduct Authority (FCA) will allow retail investors to trade crypto exchange-traded notes (cETNs) on approved UK exchanges from October 8, reversing a 2021 ban.
- While expanding access, the FCA warns that cETNs are unsecured debt instruments and not covered by FSCS protection. The ban on retail trading of crypto derivatives remains in place.
- Only cETNs listed on FCA-approved UK exchanges will qualify, and issuers must comply with strict marketing and disclosure rules, as well as the Consumer Duty rules.
The UK’s Financial Conduct Authority will reopen the door to retail investment in crypto exchange‑traded notes from October 8, ending a three‑and‑a‑half‑year prohibition.
The decision reverses a January 2021 measure that blocked the sale of cETNs to individuals on the grounds that crypto markets were too volatile and offered “no legitimate investment need” for the general public.
The change follows a global trend of expanding regulated crypto‑market access. In the US, the Securities and Exchange Commission (SEC) recently approved in-kind redemptions and spot crypto ETPs, as Crypto News Australia reported.
Related: UK’s Reeves Proposes £5 Billion Bitcoin Divestment to Address Budget Shortfall
Crypto ETNs Are Back, Derivatives Still Banned
A crypto ETN is a debt obligation issued by a financial institution. They do share some similarities to crypto ETFs, like the fact that both investment vehicles provide exposure to crypto and are traded on exchanges. However, ETNs are essentially unsecured debt instruments issued by financial institutions to investors, whereas ETFs just hold assets directly.
Moreover, the issuer promises to deliver the return of the referenced asset, using holdings as collateral. Investors do not own the cryptocurrency itself but gain price exposure through the note.
Because these instruments are only as sound as the issuing entity, financial experts and analysts will always stress the importance of dealing with well‑capitalised, reputable providers. Explained simply, the FCA stressed that cETNs fall outside the Financial Services Compensation Scheme, meaning investors have no safety net in the event of issuer failure.
Moreover, only ETNs listed on recognised UK‑based exchanges with FCA approval will qualify, and issuers must comply with strict marketing and disclosure rules.
The FCA decision does not extend to crypto derivatives. Retail trading of futures, options and perpetual contracts remains prohibited, despite the market posting over US$20.2T (AU$31.2T) in volume in Q2 2025, according to a May report from TokenInsight.
Related: Why We Crypto: A Shift from Speculation to Strategic Investment
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