FCA to Allow Retail Investors to Gain Access to Crypto ETNs Starting October

The Financial Conduct Authority will lift its ban on retail access to cryptoasset-backed exchange traded notes on 8 October this year. This follows a consultation that began in June.

Retail investors will be able to access cETNs if they are listed on FCA-recognised UK investment exchanges. These are referred to as Recognised Investment Exchanges.

Firms Must Avoid Misleading Investment Incentives

“While these products remain subject to the FCA’s mass market restriction, today’s move lays important groundwork for broader retail engagement under a regulatory framework,” Dovile Silenskyte, Director, Digital Assets Research, WisdomTree, commented.

The FCA said firms must follow financial promotion rules. These rules are designed to ensure that retail clients receive clear and accurate information. Incentives to invest must not be misleading or inappropriate.

In January 2021, the FCA implemented a ban on the sale, marketing, and distribution of derivatives and exchange traded notes referencing unregulated cryptoassets to retail clients.

“Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” David Geale, Executive Director of Payments and Digital Finance at the FCA, said.

“In light of this, we’re providing consumers with more choice, while ensuring there are protections in place. This should mean people get the information they need to assess whether the level of risk is right for them,” Geale added.

You may find it interesting at FinanceMagnates.com: FCA Applies New Tech to Handle 3,200% More Financial Promotions Reviewed in Three Years

🇬🇧 FCA to allow retail access to crypto ETNs starting Oct 8Retail investors in the UK will soon be able to trade crypto exchange-traded notes (cETNs) — but only on FCA-approved exchanges.⚠️ No FSCS coverage📋 Financial promotion rules apply✅ More access, with consumer… pic.twitter.com/8jPM0eRaGE

cETNs Lack FSCS Protection Warning

Firms must also comply with the Consumer Duty. This sets out how firms should act to deliver good outcomes for consumers. Despite this, cETNs will not be protected under the Financial Services Compensation Scheme. The FCA has warned that consumers should understand the risks before investing.

The FCA stated that the ban on cryptoasset derivatives for retail investors will stay in place. It said it will continue to review the crypto market and consider its approach to high-risk investments.