UK greenlights retail access to crypto ETNs in subdued policy U-turn

UK regulators have redrafted the playbook, allowing retail crypto ETNs while keeping derivatives banned. The FCA’s grudging concession comes with a caveat: investors walk the tightrope without a compensation safety net.

The Financial Conduct Authority announced on August 1 that retail investors in the United Kingdom will gain access to crypto exchange-traded notes beginning October 8, but only those listed on approved exchanges.

The move quietly overturns part of the regulator’s 2021 crackdown on crypto derivatives for retail traders, while leaving the broader ban firmly in place. According to the FCA’s Friday press release, firms offering ETNs must comply with strict financial promotion rules, ensuring investors receive clear risk warnings without aggressive marketing tactics.

A calculated thaw in the UK’s crypto winter

The FCA’s initial hardline stance on crypto ETNs was anchored in concerns over extreme volatility, investor harm, and the speculative nature of digital assets. Now, the regulator says crypto markets have matured significantly since the 2021 sweeping ban.

David Geale, the FCA’s executive director of payments and digital finance, pointed to this evolution when explaining the policy shift. “Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” Geale noted in the announcement.

“In light of this, we’re providing consumers with more choice, while ensuring there are protections in place,” he continued. “This should mean people get the information they need to assess whether the level of risk is right for them.”

These protections include mandatory compliance with financial promotion rules and the Consumer Duty framework, though notably absent is the safety net of Financial Services Compensation Scheme coverage. The FCA made clear that investors remain fully exposed to potential losses, emphasizing the need for caution.

The ETN decision forms part of a broader regulatory mosaic taking shape at the FCA. The regulator has been quietly building a comprehensive crypto framework, recently advancing proposals for stablecoin regulation and outlining its digital assets roadmap. These moves suggest a deliberate, if measured, effort to bring crypto within the regulated financial system rather than continuing outright resistance.