Key Takeaways
- The U.K. FCA is considering lifting the ban on crypto ETNs for retail investors after five years.
- Crypto ETNs are similar to ETFs but don’t hold the underlying asset; they track its performance.
- FCA’s decision to lift the ETN ban is seen as a progressive move.
After years of ban, the United Kingdom’s financial regulator has finally agreed to allow retail customers to access crypto-based investment products.
The U.K.’s financial watchdog is considering proposals that would allow investors in the country to purchase bitcoin and other cryptocurrencies through inexpensive ETF-style investment products shortly.
FCA To Remove 5-Year ETN Ban
In 2020, the FCA banned the sale of Bitcoin and other crypto ETNs to U.K. retail investors alongside crypto derivatives, arguing that they were inappropriate and high-risk investments.
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In a June 6 announcement , the FCA said the proposed changes would allow individual consumers to access crypto ETNs if listed on an FCA-recognized investment exchange.
“We want to rebalance our approach to risk, and lifting the ban would allow people to choose whether such a high-risk investment is right for them, given they could lose all their money,” said David Geale, executive director of payments and digital assets at the FCA.
Crypto ETNs, like Crypto ETFs, are crypto-based investment products. The only difference is that ETFs are essentially funds that hold the underlying assets of the index, while ETNs are debt securities issued by a financial firm.
U.K. Finally Warming Up to Crypto
Although the derivatives ban remains intact, the government wants to regulate the crypto market more efficiently amid a growing adoption spree.
The U.K. FCA is known for its conservative regulatory approach towards crypto, but with the latest decision to lift the ban on crypto ETNs.
These ETNs have only been available to institutional investors.
At a time when the United States has gone all-in on crypto thanks to Donald Trump’s pro-crypto stance, while Russia, UAE, and even regulatory conservative nations such as Pakistan and, to some extent, South Korea have also warmed up to crypto, the U.K. cannot lag far behind.
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