FCA lifts crypto ETN Ban: a turning point for UK retail investors

On 8 October 2025, the Financial Conduct Authority (FCA) lifted its ban on cryptocurrency exchange-traded notes (CETNs) for retail investors, which has been in place since January 2021. This is significant shift of position for the regulator, which has so far taken a cautious and restrictive approach when it comes to crypto-based derivatives. According to the FCA’s David Geale, the market for crypto products has now “evolved” and become “more mainstream and better understood”. Retail investors would still do well to be cautious however: the UK's regulatory framework for crypto derivatives is far from complete.

What is a crypto ETN?

An exchange-traded note (ETN) is an unsecured debt security linked to an index. Investors lend money to the issuer (typically a bank), which promises to repay based on the index’s performance. ETNs don’t pay interest or hold assets; repayment depends on issuer solvency. CETNs work similarly but track cryptocurrencies like Bitcoin or Ethereum. They’re high-risk due to crypto volatility and issuer credit risk. The FCA banned CETNs for retail investors, calling them “ill-suited” for consumer protection.

8 October 2025: Ban lifted

As of 8 October, however, for the first time in the UK, CETNs can now be issued and traded with retail investors, but only on an FCA-approved, UK-based Recognised Investment Exchange, which ensures a baseline of market integrity and transparency for these products. Firms will also have to comply with the FCA’s Financial Promotion Rules when marketing CETNs, so that consumers receive proper risk warnings and are not offered misleading incentives to invest. The FCA has not lifted its ban on the sale of crypto derivatives or crypto exchange-traded funds (ETFs) to retail investors, however – these remain off-limits, for now. 

The lifting of the ban is being celebrated by crypto firms and investors alike, as one might expect. Ian Taylor, board adviser to the digital assets trade association CryptoUK, told Cointelegraph that “Until now, the UK has been an outlier on ETNs", and he expressed hope that this is the first step in "lifting the ban on retail investors from accessing highly-regulated derivative products." Global firms like Blackrock are also gearing up to take advantage of the policy shift: Blackrock has said that it wants to offer its 'iShares Bitcoin ETP' to UK retail investors.

CETNs in other jurisdictions

Many other jurisdictions have not been as cautious as the UK: there is no blanket ban on CETNs in the EU for example, and many EU Member States have allowed their issue and trade since inception. Germany’s Deutsche Börse Xetra, and exchanges in Switzerland, France, and the Nordics list numerous crypto exchanged-traded products that retail investors can buy. The US might be relaxing their restrictions on CETNs as well: despite being hesitant over the last 6 years, and maintaining a prohibition on retail CETNs, the SEC approved some spot Bitcoin and Ethereum ETFs in early 2024: CETNs may well be next. 

UK regulatory framework

The FCA's decision does not resolve the broader shortcomings in the UK’s legal framework for cryptoassets. Instead, it may expose some of the weaknesses in the existing regime that market participants and policymakers are grappling with.

First is the lack of traditional investor protections for most crypto-related investments. Because cryptoassets are generally not yet treated as regulated financial instruments, losses from crypto investments do not fall under the Financial Services Compensation Scheme (FSCS), which is the UK’s deposit and investment insurance fund; disputes arising are not going to be covered by the Financial Ombudsman Service (FOS) either. The FCA has taken pains to make this clear to investors as part of its decision. This is a stark contrast to traditional investments (like stocks or shares), where authorised firms’ misconduct or failure can trigger FSCS payouts or Ombudsman redress. All the risk is therefore on retail investors' shoulders.

Second is the fact that many cryptoasset-related services in the UK remain outside the perimeter of financial regulation. At the moment, trading platforms, custodians, and other crypto firms currently only require AML registration with the FCA, but not full FCA authorisation for most activities. That means that, if an exchange were to collapse (as happened with overseas platforms like FTX), UK users would not benefit from client asset protections or prudential standards that a regulated investment firm must follow. However, this position is set to change for cryptoasset businesses by mid-2026 when a full FCA authorisation regime will be required. 

Third is the regulation of cryptoasset promotions: there has been some good progress in this area as a result of FSMA 2023, which meant that businesses can only lawfully communicate crypto investment invitations if they are authorised (or the promotion is approved by an authorised firm). If promotions are aimed at UK retail investors, they have to comply with the FCA's rules on misleading content and cooling-off periods. This warns consumers that things might go wrong, but without a robust regulatory framework for when things do, there are still steps to be taken. In other words, consumers are now being warned that crypto is high risk and speculative (with standardised labels like “You should not expect protection…”) but, if they proceed to invest, the current regulations still offer limited protection if things go wrong.

Cryptoassets in law

The status of cryptoassets in legal terms has so far been determined by a series of novel cases, as the English Courts attempt the reconcile these new and strange qualities of cryptoassets with the historic common law definitions of 'property'. Of course, since AA v Persons Unknown in 2019, cryptocurrency has been confirmed to be a form of 'property' capable of being the subject of proprietary remedies. 

While the case law makes fascinating reading for solicitors, retail investors and firms will be relieved that a statute is incoming: the Property (Digital Assets) Bill, introduced in the House of Lords in September 2024, is nearing enactment. This legislation will, for the first time, codify the property status of digital assets in statute, introducing a third category of personal property to encompass cryptoassets and other digital things. It aims to eliminate any remaining doubt that crypto tokens (including cryptocurrencies and non-fungible tokens) are property in themselves, not merely rights against third parties. The Bill could also provide for new mechanisms like statutory trusts for custody of digital assets (which is important for protecting users’ assets were a custodian to become insolvent). In addition, the government has said it expects a "comprehensive" cryptoasset regulatory regime, as enabled by FSMA 2023, to be rolled out in 2026. 

Conclusion

The FCA’s decision to lift the ban on crypto ETNs is a significant shift in the UK's regulatory landscape for cryptoassets, bringing its rules more into line with those of other jurisdictions, and granting greater freedoms to retail investors. This is a fast-moving area of law, regulation and business: the present situation looks very different to the cautious approach of even 2 years ago, and in 2 years' time, with the anticipated release of a new Act and further regulation in the pipeline, it will likely have transformed again.