The regulatory body in the UK responsible for financial oversight, the Financial Conduct Authority (FCA), has reversed its previous stance and will now permit retail investors to access cryptocurrency exchange-traded notes (cETNs).
Businesses operating within the UK will soon have the opportunity to offer cETNs to individual consumers. These regulatory alterations will become effective starting October 8, 2025, as detailed in an official announcement released by the FCA on Friday.
This shift in the UK’s approach to regulating crypto assets follows the FCA’s initial decision to prohibit crypto ETNs back in January 2021. The original ban cited concerns surrounding the considerable volatility of crypto assets and the perceived “lack of a genuine investment requirement” for retail investors.
According to the announcement, David Geale, the FCA’s executive director overseeing payments and digital finance, stated that “Since our earlier limitations on retail access to cETNs, the market landscape has transformed, and these products have gained greater acceptance and understanding.”
Understanding Crypto ETNs
Unlike cryptocurrency exchange-traded funds (ETFs), which directly mirror the value of underlying assets like Bitcoin (BTC) held in custody, crypto ETNs do not have the backing of underlying assets. Instead, they function as debt securities.
According to the description provided by Bitpanda, an Austrian crypto trading platform, “Instead of holding equity in a fund, each traded note in an ETN constitutes an obligation from a legal entity that possesses the underlying asset as collateral.”
By investing in an ETN that tracks cryptocurrencies, investors can gain exposure to the actual digital assets through their existing brokerage accounts or banking institutions.
Bitpanda notes that ETNs involve certain risks, such as limited control over the underlying assets. This highlights the importance of sourcing ETNs from well-established and reliable institutions to ensure the safety of investments.
Crypto Derivatives Remain Prohibited
While the FCA is now allowing crypto ETNs, it has yet to determine whether it will permit retail investors to access crypto derivatives, which were banned concurrently with ETNs in 2021.
The regulator stated that it “will continue to observe market trends and assess its approach to investments that carry a high degree of risk.”
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According to data from the crypto analytics platform TokenInsight, crypto derivatives, including products like crypto futures, options, and perpetual contracts, demonstrated resilience during the second quarter of 2025, with trading volumes reaching $20.2 trillion.
In contrast, trading volumes on centralized exchanges (CEXs) experienced a significant decline of 22%, contrasting sharply with the performance of cryptocurrency ETFs.
US Permits In-Kind Redemptions for Crypto ETFs: Limited Retail Impact
Cryptocurrency ETFs have experienced remarkable growth since their groundbreaking launch in the United States in 2024. Issuers such as BlackRock have reported a substantial 370% surge in inflows during Q2 2025, with crypto funds consistently achieving record-breaking milestones.
On Tuesday, the US Securities and Exchange Commission (SEC) issued a significant ruling regarding crypto ETFs, officially authorizing issuers to proceed with in-kind creations and redemptions, allowing for the exchange of ETF shares for the underlying crypto assets.
While this development is widely considered positive news for the cryptocurrency sector, ETF analysts like Eric Balchunas suggest that it is unlikely to have a substantial impact on retail investors.
In a Tuesday post on X, Balchunas commented, “This isn’t a major game-changer for retail investors; it’s more of a behind-the-scenes adjustment. It simply streamlines the process.” He further emphasized that the most important takeaway is the SEC’s growing acceptance of crypto as a legitimate asset class.
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