UK financial watchdog eases restrictions on crypto-backed exchange-traded notes

UK financial watchdog eases restrictions on crypto-backed exchange-traded notes - Industry News - News

A Major Milestone in the UK’s Financial Landscape: FCA Allows Professional Investors to Trade Crypto ETNs

The United Kingdom’s Financial Conduct Authority (FCA) has made a groundbreaking decision, enabling professional investors to engage in trading crypto exchange-traded notes (ETNs) provided by recognized investment exchanges (RIEs). This announcement on March 11 marks a significant step towards integrating cryptocurrency-related financial products within the UK’s regulated financial environment.

Reaction from Crypto Industry:
Industry players in the cryptocurrency sphere have largely welcomed this development, viewing it as a positive step towards the wider adoption of crypto assets within the UK’s financial sector. However, concerns persist regarding excluding retail investors from accessing these investment opportunities.

Partial Victory Amid Regulatory Conditions:
The contact regulatory framework currently prohibits the offering of exchange-traded funds (ETFs) for individual assets like Bitcoin and Ethereum. Consequently, exchange-traded products (ETPs) such as ETNs are increasingly favored in regions like the contact Union and the UK. With the FCA’s approval, traditional finance institutions and UK traders may soon have easier access to crypto-linked financial instruments.

UK’s Aspiration as a Global Crypto Hub and Retail Participation:
Despite the FCA’s cautious stance towards the crypto industry, the UK government aims to position the country as a global hub for cryptocurrency technology. However, the FCA’s decision to only permit professional investors to trade crypto ETNs highlights a reluctance to encourage broader retail participation within the crypto market.

Calls for Inclusive Measures:
Industry insiders applaud this move, but there is a growing demand for more inclusive measures to be implemented. George McDonaugh, co-founder of KR1, emphasizes the significance of attracting more companies into the UK markets to fulfill the country’s ambition of becoming a leading global crypto industry hub.

FCA’s Position on Crypto Derivatives for Retail Investors:
The FCA’s cautious stance towards crypto derivatives for retail investors remains unchanged, as evidenced by the ban on offering crypto ETNs to this demographic. The regulatory body cites potential risks and significant harms within the crypto market as the rationale for maintaining this stance.

Awaiting Change in FCA’s Position on Retail Investors:
Despite the current ban, there is optimism within the industry that the FCA may reconsider its stance on allowing retail investors access to crypto ETNs. However, the FCA asserts that it will continue to review and assess the potential risks associated with offering these investment products to retail consumers.