The Financial Conduct Authority (FCA) in the United Kingdom has reversed its previous policy, now permitting retail investors to access cryptocurrency exchange-traded notes (cETNs).
Companies operating within the UK will soon have the green light to offer cETNs to individual consumers, a change set to take effect on October 8, according to an official statement released by the FCA on Friday.
This revised stance from UK regulators on cryptocurrencies arrives following the FCA’s ban on crypto ETNs back in January 2021. That decision was driven by concerns over the extreme price fluctuations associated with crypto assets and the perception that there was “no genuine investment need” for retail investors.
“Since we originally restricted access to cETNs for retail investors, the market has matured, and these products have become more established and better understood,” stated David Geale, Executive Director of Payments and Digital Finance at the FCA, in the announcement.
Understanding Crypto ETNs
Unlike cryptocurrency exchange-traded funds (ETFs), which are designed to mirror the price of underlying assets like Bitcoin (BTC) held in custody, crypto ETNs do not have backing from any tangible assets. They instead represent debt securities.
“Rather than holding equity in a fund, each traded unit of an ETN signifies an obligation from a legal entity that holds the underlying asset as collateral,” explains Bitpanda, an Austrian cryptocurrency trading platform, in its ETN description.
By investing in an ETN that tracks cryptocurrencies, investors can gain exposure to actual crypto assets through their usual brokers or banking providers.
ETNs come with inherent risks, such as limited control over the underlying assets. Bitpanda emphasizes the importance of purchasing ETNs from reputable institutions to safeguard investments.
Crypto Derivatives Remain Prohibited
While the FCA is now permitting crypto ETNs, the question of whether retail investors should have access to crypto derivatives remains unresolved. The authority banned these products, alongside ETNs, back in 2021.
“The FCA will continue to observe market developments and re-evaluate its approach to investments that are considered high-risk,” the regulatory body stated.
Related: Coinbase critique UK financial system in recent video
Crypto derivatives, including instruments such as crypto futures, options, and perpetual contracts, demonstrated resilience during the second quarter of 2025. According to data from the crypto analytics firm TokenInsight, trading volumes reached $20.2 trillion.
Conversely, trading volumes on centralized exchanges (CEXs) experienced a significant decline of 22%, a stark contrast to the performance of cryptocurrency ETFs.
US Allows In-Kind Crypto ETF Redemptions: Minimal Retail Impact
Cryptocurrency ETFs have achieved substantial growth since their launch in the US back in 2024. Investment firms like BlackRock reported a 370% increase in inflows during the second quarter of 2025, with crypto funds consistently setting new records.
On Tuesday, the US Securities and Exchange Commission (SEC) made another noteworthy decision regarding crypto ETFs, authorizing issuers to implement in-kind creations and redemptions, allowing the exchange of ETF shares for the underlying crypto assets themselves.
While the move is widely regarded as a significant development for the crypto sector, ETF analysts, such as Eric Balchunas, suggest it will likely have a limited impact on retail investors.
“This is more of a plumbing upgrade than a revolutionary change for retail investors. It simply streamlines the process,” Balchunas explained in a post on X on Tuesday. He added that the primary significance lies in the SEC’s increasing acceptance of crypto as a legitimate asset class.
Magazine: Price predictions in crypto trading: Peter Brandt calls it ‘foolish’