FCA Considers Dropping Crypto ETN Ban as it Eases Digital Asset Stance

The UK’s Financial Conduct Authority (FCA) says it is considering removing its ban on crypto exchange traded notes for retail investors in a major turnaround for the financial regulator which took a robustly anti-digital asset stance until the start of 2025.

The announcement comes as the latest step towards establishing a regulatory framework for cryptocurrencies, following the publication of proposals around both stablecoins and prudential requirements for digital asset firms.

Removing the ban is being considered for the first time since the FCA announced that it was making the sale, marketing and distribution of derivatives and ETNs to UK retail investors in January 2021 illegal. Institutional investors have been able to trade these contracts on recognised investment exchanges since March 2024.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” says David Geale, executive director of payments and digital finance at the FCA. “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.”

For now, the ban remains in place, but the regulator has said that its consultation comes as such products are readily available for investors in other countries. If the block is removed, financial promotion rules would apply and consumers would have to be appropriately informed of the risks they’re facing.

The proposals are part of the regulator’s push to help make the UK economy more competitive, in line with government objectives.