UK Regulator Reopens Crypto ETNs to Retail Investors After 3-Year Ban

     

FCA acknowledges market maturity, lifts retail restriction on crypto-linked debt securities starting October 8

The United Kingdom’s Financial Conduct Authority (FCA) has reversed its 2021 ban on cryptocurrency exchange-traded notes (cETNs) for retail investors, signaling a shift toward greater regulatory openness in the crypto sector.

Announced Friday, the decision allows UK firms to offer crypto ETNs to individual investors beginning October 8. The FCA said the market has matured significantly since its initial ban, with improved understanding and risk frameworks around digital assets.

“Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” said David Geale, the FCA’s executive director for payments and digital finance.

The move marks a notable policy shift for the UK’s financial watchdog, which previously justified the ban by citing crypto’s volatility and a lack of investment necessity for retail traders.

What are Crypto ETNs, and how do they differ from ETFs?

Unlike crypto exchange-traded funds (ETFs), which are backed by actual assets held in custody, exchange-traded notes are unsecured debt instruments that track the price of cryptocurrencies without direct ownership of the underlying assets.

Each note in a cETN reflects a claim on the issuer rather than a share in a fund, making them more reliant on the credibility of the issuing institution. Despite these risks, cETNs offer investors streamlined access to crypto exposure through traditional brokers and platforms.

Derivatives remain off-limits for retail

While the FCA has opened the door to crypto ETNs, crypto derivatives – including futures, options, and perpetual contracts – remain banned for retail customers in the UK.

“The FCA will continue to monitor market developments and consider its approach to high-risk investments,” the regulator said.

Despite the ban, derivatives markets remain active globally, with Q2 2025 volumes reaching $20.2 trillion, according to TokenInsight – underscoring rising institutional participation even as centralized exchange volumes decline.

US crypto ETF reforms seen as neutral for retail

Meanwhile in the United States, the SEC recently approved in-kind creation and redemption mechanisms for crypto ETFs, allowing issuers to swap ETF shares directly for underlying digital assets like Bitcoin.

While the move is considered a major infrastructural improvement for institutional players, analysts say it’s unlikely to impact retail access in a meaningful way.

“It just makes the pipes a little better,” said Bloomberg ETF analyst Eric Balchunas, emphasizing that the bigger takeaway is the SEC’s growing acceptance of crypto as a legitimate asset class.