The UK Financial Conduct Authority lifts the ban on exchange-traded funds for cryptocurrency for investors
The Financial Conduct Authority (FCA), the UK’s financial regulator, stated that it will allow consumers to access crypto exchange-traded notes (cETNs), as the regulatory body aims to grow digital assets in Britain.
This move means that cETNs can be sold to individual consumers and not just professional investors in the UK, provided they are traded on an investment exchange recognized by the Financial Conduct Authority (recognized investment exchange or RIE), according to a press release from the FCA on Friday.
The FCA noted that similar products are already available in other countries. The FCA's ban on retail access to cryptocurrency derivatives will remain in place, while the regulatory body continues to monitor market developments and consider its approach to high-risk investments, according to the statement.
With regulatory frameworks emerging around the world, the UK feels the need to compete, as evidenced by the UK government's consultations on cryptocurrency rules and recent comments from Treasury Secretary Rachel Reeves.
David Gill, the executive director for payments and digital assets at the Financial Conduct Authority, said: "This consultation demonstrates our commitment to supporting the growth and competitiveness of the cryptocurrency industry in the UK."
Gill added in a statement: "We want to rebalance our approach to risk, and lifting the ban will allow people to make the choice about whether this high-risk investment is suitable for them, given that they could lose all their money."
The Financial Conduct Authority stated that the current financial promotion rules in the UK will apply so that consumers receive information about the risks and will not be offered inappropriate incentives to invest, in the same way as if they had bought cryptocurrencies directly.
Diego Palon Ocio, a partner at Clifford Chance, said via email: "This development is perfectly aligned with the UK's ambition to position itself as a leading jurisdiction in the cryptocurrency space."
He added: "This will not only open exposure to cryptocurrencies for individual investors, but also stands as a signal that the UK is open to cryptocurrencies. More work is needed on the prudential treatment of these assets, but we are certainly moving in the right direction."
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