FCA plans to lift UK retail ban on crypto ETNs for Bitcoin and Ethereum access.
Analysts expect limited UK retail demand despite regulatory shift.
US Ether ETFs saw $800M+ inflows in 14 days, outpacing UK interest.
The FCA in the United Kingdom aims to end its ban on allowing retail investors to buy cryptocurrency exchange-traded notes (ETNs). There is a possibility that UK regulators will lift the ban on crypto ETNs, as more people around the world use crypto ETFs and BlackRock has now registered as a crypto asset firm with the FCA. Despite the regulatory shift, market analysts suggest that retail demand in the UK could remain limited.
UK Regulator Proposes Changes to Broaden Retail Access
On June 6, the FCA said it plans to lift its restriction on retail investors taking part in crypto exchange-traded notes (ETNs). After the update, individuals in the UK may invest in financial goods tied to Bitcoin and Ethereum on official exchanges. David Geale, as executive director of payments and digital assets at the FCA, says the main aim is to allow consumers more freedom to judge the risks. He pointed out that even though the investment funds are risky, retail investors should be able to decide if they are suitable for their finances.
The FCA’s proposal signals a growing willingness to accommodate crypto financial instruments under stricter supervision. Legal experts believe this shift reflects the UK’s intention to position itself as a more competitive player in the digital asset space. Diego Ballon Ossio, a partner at Clifford Chance, said that the regulator’s move illustrates rising interest in fostering crypto innovation while keeping investor protection in focus.
Analysts Weigh on Retail Investors
Despite the regulatory progress, industry experts expect a limited retail response. Bloomberg’s senior ETF analyst Eric Balchunas stated that the change is unlikely to trigger major inflows into the new products. He pointed to European investors’ historically low interest in crypto ETFs and emphasized the region’s general reluctance toward such financial instruments.
Balchunas noted that while UK investors will now gain access, the combination of higher fees compared to the US and overall subdued enthusiasm could weigh on adoption. The lack of existing momentum in the UK ETF market, especially for crypto-specific products, adds to the skepticism surrounding the proposed expansion.
FCA’s Proposal Marks a Step Forward
Nate Geraci, president of the ETF Store, highlighted the contrast with the US market. He mentioned that the iShares Ethereum Trust (ETHA) in the US has recorded 14 consecutive days of inflows. Over $800 million in new capital has entered US Ether ETFs during that period, showing stronger engagement compared to European counterparts.
While the FCA’s proposal to permit retail access to Bitcoin and Ethereum ETFs represents a shift in policy, it may not immediately translate into significant market activity. Industry observers argue that cultural and structural differences between the US and UK investment communities will likely shape the outcome.
The proposal could still serve as a foundation for future growth if demand gradually builds, but for now, expectations remain cautious.
