The UK financial watchdog has lifted its four-year ban on the use of crypto-based exchange-traded notes (ETNs) for retail investors, a decision that could potentially boost the UK’s crypto market by 20%.
This change, announced earlier this year and effective immediately, has been embraced by crypto vendors and investment platforms. Research from investment platform IG indicates that the reversal of the ban may lead to increased consumer interest in crypto-related investments.
Michael Healy, UK managing director at IG, noted, “With ETNs set to launch, we expect a surge in crypto adoption—especially among younger generations who are already comfortable with digital assets. This could signal the beginning of a new era for mainstream crypto investing in the UK.”
ETNs are debt instruments designed to track the performance of an underlying asset. Currently, there are 17 such instruments listed on UK exchanges, which have been previously accessible only to institutional investors.
However, Nick Jones, founder and CEO of digital assets platform Zumo, cautions that retail investors should thoroughly understand these products before investing, rather than relying solely on marketing efforts. He emphasized, “This is just the first step in the journey, and it is crucial that providers think beyond marketing to address any gaps in consumer understanding.”
Jones also pointed out that retail investors need to be aware of what crypto products remain unavailable under the FCA’s regulations. Although certain ETNs will now be accessible via UK-recognized investment exchanges, the actual options are quite limited due to listing requirements, and the ban on retail access to crypto derivatives persists. Additionally, US-style crypto ETFs remain off-limits.
According to Jones, it’s essential for the industry to clarify these complexities to investors without overstating the opportunities, thereby acting in line with the spirit of Consumer Duty.