As the UK prepares to reverse its ban on crypto Exchange Traded Notes (ETNs) on October 8, 2025, companies are weighing in on the potential impact of this regulatory shift. The Financial Conduct Authority (FCA) is lifting restrictions that have been in place since January 2021, opening the door for retail investors to access this previously restricted market.
Background of the Ban and Reversal
The FCA initially imposed the ban due to concerns about the extreme volatility of cryptocurrency markets, the lack of a clear fundamental value for the assets, widespread investor misunderstanding of product risks, and the high potential for fraud and market manipulation. However, the FCA has since acknowledged that the market has evolved, and crypto-related products are now better understood. David Geale, Executive Director of Payments and Digital Finance at the FCA, stated that the decision reflects a desire to provide consumers with more choice while ensuring appropriate protections are in place.
What are Crypto ETNs?
Crypto ETNs are debt securities that track the performance of a specific cryptocurrency, such as Bitcoin or Ether, or a basket of digital assets. They are similar to Exchange Traded Funds (ETFs) but, unlike ETFs, ETNs are not backed by underlying assets. Instead, they are unsecured debt securities issued by a bank or financial institution, promising to pay the return of the crypto asset minus fees. This means investors do not directly hold the cryptocurrencies, avoiding the complexities of digital wallets and private keys.
Industry Reactions and Preparations
The impending policy change has sparked considerable interest and activity among companies in the crypto space. BlackRock, the world's largest asset management company, is reportedly exploring ways to offer its iShares Bitcoin exchange-traded product to prepare for retail trading. Bitwise CEO Hunter Horsley expressed excitement about serving more investors in the UK, which is home to their European operations.
Stratiphy, a digital wealth management platform, has partnered with 21Shares, a large issuer of physically backed crypto exchange-traded products, to offer retail investors access to crypto ETNs as soon as the regulatory change takes effect. Daniel Gold, CEO and founder of Stratiphy, noted the soaring investor demand for digital assets and the desire for portfolio diversification.
Implications for Retail Investors
Starting October 8, UK retail investors will be able to purchase crypto ETNs through FCA-approved, UK-based investment exchanges. This provides a regulated avenue for accessing the crypto market without the need to directly manage digital assets. However, investors will need to pass suitability tests and understand the risks involved, as they will not be covered by the Financial Services Compensation Scheme (FSCS). Financial promotion rules will also apply, ensuring consumers receive the necessary risk information and are not offered inappropriate investment incentives.
Remaining Restrictions and Future Outlook
While the FCA is lifting the ban on crypto ETNs, it is maintaining its prohibition on retail access to crypto derivatives, including futures, options, and contracts for difference (CFDs). The regulator will continue to monitor market developments and consider its approach to high-risk investments.
Despite the remaining restrictions, many industry observers view the reversal of the crypto ETN ban as a positive step for the UK's crypto market. It aligns the UK with other jurisdictions that already allow retail access to regulated crypto instruments and positions the country as a potential hub for digital assets.
