Introduction
Britain's financial regulator has decided to lift the ban on consumers purchasing crypto exchange-traded notes (ETNs), marking a significant shift in its regulatory stance towards digital assets.Context
The Financial Conduct Authority (FCA) announced this change on Friday, emphasizing that allowing retail investors to acquire ETNs would foster growth and enhance competitiveness within the financial sector. This move signals the UK government's desire to stimulate the economy and promote a burgeoning digital assets industry.Developments
Previously, in 2022, the FCA had approved the launch of ETNs but restricted access for retail investors, citing concerns that these products were "ill-suited" due to the potential harm they posed. David Geale, executive director of payments and digital assets at the FCA, stated that rebalancing the approach to risk is crucial, allowing individuals to decide whether a high-risk investment aligns with their financial goals. This proposal is now set to undergo a consultation phase.As part of this regulatory shift, Britain has begun to implement compulsory regulations for cryptocurrencies, aligning itself more closely with the United States, while distinguishing itself from the European Union's tailored rules for the industry. Any ETNs sold to individual consumers must be traded on FCA-approved investment exchanges according to the regulator's stipulations. However, the FCA will continue to prohibit retail investors from trading cryptoasset derivatives.