The UK FCA lifted its years-long retail ban on crypto ETNs today, paving the way for further mainstream adoption of Bitcoin and other digital assets.
The ban reversal officially took effect today, the UK Financial Conduct Authority (FCA) earlier disclosed. This means that investors in the United Kingdom can now access the crypto exchange-traded notes (ETNs) market alongside institutional investors.
UK Lifts Ban on Crypto ETNs
For the uninitiated, ETNs are debt instruments that give holders exposure to an underlying asset. Its difference from ETFs is that it does not hold the physical asset but is issued as an unsecured debt, similar to a bond, tracking the performance of an asset.
The UK’s top regulator banned ETNs in January 2021, restricting exchanges and financial institutions from marketing or distributing the products to investors. The reason behind this action was to protect them from the uncertainty of the cryptocurrency market.
Meanwhile, with global regulatory policies around digital assets easing off, the UK’s FCA has followed suit. After allowing the London Stock Exchange to list the Bitcoin ETNs for institutional investors in March 2024, it announced in August that retailers would have access to the investment vehicle from October 8.
But There’s a Twist
Despite officially lifting the ban today, retail investors would still not be able to buy the products immediately. An earlier FT report highlighted that they would have to wait until October 13 to finally access crypto ETNs.
The delay occurred as the FCA resumed accepting prospectuses for issuers seeking to offer these crypto products on September 25, which is two weeks before the launch date. This decision has sparked widespread criticism of the UK watchdog for its cautious approach to crypto.
Nonetheless, lifting the ban has been an improvement from the earlier hardline stance on crypto. The move would now allow retail investors to buy Bitcoin and other cryptocurrencies in a regulated exchange, like their counterparts do in the United States.
Ban Lift to Open Crypto to Over $930B in Savings
Moreover, the development could enable crypto investments to access $930 billion in individual savings accounts (ISAs) and self-invested personal pension (SIPP) accounts. These accounts held over $930 billion in assets as of 2023, the UK government disclosed.
Remarkably, holders of these accounts do not pay taxes on investments made through them but have limited product options to invest in on regulated exchanges. Authorities are already making efforts to offer Bitcoin and Ethereum ETNs to these eligible ISA and SIPP accounts but await regulatory approval.
If approved, nearly $1 billion could enter the UK crypto market from these tax-efficient savings accounts alone.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
