Starting October 8, 2025, retail investors in the United Kingdom will once again be permitted to purchase Bitcoin exchange-traded notes (ETNs), marking a significant policy reversal by the country’s Financial Conduct Authority (FCA). This change ends a ban imposed in 2021 that had prohibited the sale, marketing, and distribution of crypto ETNs and derivatives to retail consumers. The FCA’s move reflects a broader shift towards regulated inclusion of digital assets within traditional investment frameworks, with the products required to be traded on recognised and approved UK exchanges such as the London Stock Exchange.

ETNs provide investors with indirect exposure to cryptocurrencies by tracking the performance of an underlying asset, without requiring direct ownership of the digital currency itself. These are unsecured debt instruments issued by financial institutions, designed to mirror returns from specific indices or benchmarks. For UK investors not ready or willing to hold cryptocurrencies directly, ETNs offer a simpler entry point into the market. However, unlike spot bitcoin exchange-traded funds (ETFs), these notes are credit-linked instruments rather than being backed by the underlying crypto asset.

While this development has been welcomed by industry stakeholders as a positive step, experts caution that it is a limited form of access that falls short of permitting retail investors to trade crypto derivatives such as futures and options—which remain banned due to continuing concerns over volatility, complexity, and potential consumer harm. Susie Violet Ward, CEO of Bitcoin Policy UK, told BeInCrypto that although lifting the ETN ban is "a welcome step in the right direction," it is "an odd choice" to reintroduce indirect exposure via a more complex debt instrument instead of enabling direct ownership. She argued that the FCA’s earlier regulatory approach, characterised by overrestriction, stifled innovation and pushed market opportunities offshore without effectively safeguarding consumers.

The FCA has emphasised that the removal of the ban on crypto ETNs will come with strict consumer protection safeguards. Financial promotion rules will apply to ensure that retail investors receive clear risk disclosures and are not subject to inappropriate inducements or unsuitable advice. Additionally, the Consumer Duty framework will govern firms offering these products to retail customers, aiming to promote fair treatment and transparency in this nascent market sector.

This regulatory relaxation aligns with a strategic objective to enhance the UK's competitiveness in the digital assets arena. Since the 2021 prohibition, the UK has lagged behind other global financial hubs in the race to become a dominant centre for crypto innovation and investment. According to Reuters, the FCA now sees regulated retail access to ETNs as a means to support economic growth and better position the UK’s financial services sector in the evolving digital finance ecosystem. However, the FCA has made clear that the ban on retail access to crypto derivatives remains in place, reflecting ongoing caution about consumer risk exposure to complex and highly volatile products.

In summary, the FCA’s restoration of retail access to crypto ETNs represents a cautious but notable liberalisation of UK crypto policy. While it offers retail investors a regulated pathway to gain exposure to leading cryptocurrencies like Bitcoin and Ethereum via traditional investment channels, it stops short of allowing direct crypto ownership or trading in derivatives. Industry voices advocate this should be regarded as a first step, with future policy developments necessary to enable more meaningful participation and innovation in digital assets markets, while maintaining robust consumer protections.

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Source: Noah Wire Services