UK retail investors will be able to buy exchange-traded notes (ETNs) linked to cryptocurrencies starting October 8, according to an August 1 announcement by the Financial Conduct Authority (FCA).
This is the first major change since the FCA banned crypto ETNs and derivatives for retail customers over concerns about high risk and unclear benefits.
David Geale, executive director for payments and digital finance at the FCA, said, “Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood”.
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This change does not apply to crypto derivatives, such as futures or options. These products remain unavailable to retail investors in the UK. The FCA said it will keep watching how these markets develop and may adjust its position in the future.
The regulator noted that it plans to continue reviewing all high-risk investment products. It also reminded firms offering crypto ETNs to meet their rules for clear information, fair pricing, and customer protection.
Crypto ETNs differ from exchange-traded funds (ETFs). While ETFs hold the actual digital assets they track, an ETN is a type of debt.
The Austrian platform Bitpanda explained, “Instead of equity in the fund, each traded note of an ETN represents an obligation from a legal entity holding the underlying asset as collateral”.
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Having completed a Master’s degree in Economics, Politics, and Cultures of the East Asia region, Aaron has written scientific papers analyzing the differences between Western and Collective forms of capitalism in the post-World War II era.With close to a decade of experience in the FinTech industry, Aaron understands all of the biggest issues and struggles that crypto enthusiasts face. He’s a passionate analyst who is concerned with data-driven and fact-based content, as well as that which speaks to both Web3 natives and industry newcomers.Aaron is the go-to person for everything and anything related to digital currencies. With a huge passion for blockchain & Web3 education, Aaron strives to transform the space as we know it, and make it more approachable to complete beginners.Aaron has been quoted by multiple established outlets, and is a published author himself. Even during his free time, he enjoys researching the market trends, and looking for the next supernova.
