The UK’s long-awaited reopening of crypto exchange‑traded notes (ETNs) stumbled out of the gate on Wednesday, as the Financial Conduct Authority’s (FCA) formal lifting of its ban failed to translate into immediate access for retail investors — sparking fresh criticism of Britain’s slow‑moving regulatory machinery.
The FCA’s decision opens a narrow but notable path for retail access to digital asset‑linked investment products—provided they are traded on UK‑recognised exchanges and comply with strict promotion rules. The move reflects a significant recalibration in the regulator’s stance on crypto exposure.
The FCA confirmed in August that the three‑year ban would end on October 8, but the regulator only began accepting base prospectuses from issuers on September 23 — leaving little time to review submissions before launch. As a result, retail access may not open until October 13 or later.
“Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood,” said David Geale, the FCA’s executive director for payments and digital finance. “In light of this, we’re providing consumers with more choice, while ensuring there are protections in place.”
Both the FCA and the London Stock Exchange (LSE) are still ironing out operational details, including whether to create a dedicated trading segment for retail‑eligible crypto ETNs.
Alex Watkins, ETP business development lead at the LSE, struck a more measured tone. “We welcome the FCA’s decision to enable retail access to crypto ETNs and look forward to expanding our Main Market offering to include crypto ETNs for retail investors, once the FCA has approved the Retail Base Prospectuses submitted by prospective issuers,” he said.
Crypto ETNs—essentially unsecured debt securities tied to crypto‑asset performance—will still carry caveats. Investors won’t be covered by the Financial Services Compensation Scheme if things go wrong. And these products must sit within FCA‑approved trading venues, known as Recognised Investment Exchanges.
The FCA added that its broader ban on crypto derivatives for retail customers remains in force, citing persistent concerns around complexity and risk. Still, the regulator said it will continue to monitor developments in digital assets and assess how its framework aligns with innovation and consumer protection.
London’s Liquidity Problem
Despite the FCA’s rhetoric about investor choice, the London market remains a laggard in crypto‑linked instruments. LSE figures show crypto ETNs account for just 0.59 % of total European volume, averaging £624,000 in daily trades. Across Europe, crypto ETN activity reached €26 billion in 2024.
The sluggish rollout also highlights London’s diminishing role in digital asset liquidity. While continental exchanges like Deutsche Börse and SIX Swiss Exchange list dozens of crypto ETNs with active retail participation, UK investors remain fenced off from the same products.
As the FCA and LSE finalize the framework, issuers and investors alike are waiting to see whether London can recover some of its lost ground in Europe’s rapidly expanding digital markets — or whether red tape will once again leave the City watching from the sidelines.