FCA’s Proposal to Allow Retail Investors in Crypto ETNs

The Financial Conduct Authority (FCA) has proposed lifting the ban on retail investors accessing crypto exchange traded notes (cETNs). According to FCA, similar offerings are already available worldwide. By allowing cETNs for individual consumers rather than solely professional investors, this move applies only if they are traded on a FCA-approved investment platform.

FCA’s Approach to High-Risk Investments

The regulator intends for financial promotion rules to be applied so that consumers receive information about the associated risks and are aware of any inappropriate incentives. This mirrors how traditional crypto asset purchases would be handled, ensuring transparency for individual investors, who could still face significant losses.

This development aligns with the FCA’s goal to support growth and competitiveness in the UK’s cryptocurrency sector. By removing the ban on cETNs, the regulator is seeking to balance risk management while providing more investment options to individuals. Nonetheless, it should be acknowledged that this remains a high-risk investment where one can potentially lose all their invested funds.

Regulatory Framework for Cryptocurrency Services

Following its mission to establish a regulatory framework for cryptocurrency services, the FCA recently published proposals on stablecoin issuance. The regulator believes these will enable UK crypto firms to compete internationally, especially since currently, two USD-pegged stablecoins dominate about 90% of the market.

The findings from the regulator’s research indicate that UK consumers are more likely to engage with stablecoins when they have increased regulatory protections in place. Additionally, the Bank of England plans to release its own consultation paper on stablecoins later this year.

Tokenized GBP (tGBP) Launch

BCP Technologies, a UK-registered crypto firm, has launched Tokenized GBP (tGBP), after testing in the FCA-regulated sandbox. This initiative provides both individuals and institutions with a means to transfer GBP on-chain, supported by various wallet options.

Despite these developments, the FCA’s ban on retail access to crypto asset derivatives will remain until further notice as they continue monitoring market developments and considering their approach to high-risk investments.