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Retail investors in the UK may experience a waiting period before they can access regulated cryptocurrency investment options, leaving many eager consumers disappointed as they look to capitalize on the rising values of digital assets.
The Financial Conduct Authority (FCA), the UK’s financial regulatory body, announced in August that it would remove its prohibition on crypto exchange-traded products (ETPs) for retail investors, slated to take effect next Wednesday.
However, individuals may need to exercise patience for almost an additional week to be able to invest in products tied to Bitcoin and Ether, according to information from five sources with direct knowledge of the situation.
Although the anticipated delay is expected to be relatively brief, it has sparked frustration among industry leaders, who have largely directed blame towards the FCA. This follows previous criticism of the UK regulator’s conservative stance on cryptocurrency matters.
“It seems counterintuitive that the ban is being lifted, yet retail investors won’t have immediate purchasing access,” a source remarked.
A senior executive in the crypto sector commented, “There has been ample time for preparation,” and added, “The timeframe given to complete all necessary steps has been very short.”
Companies seeking to offer crypto ETPs are required to submit their prospectuses to the FCA for regulatory review. However, the FCA only began accepting these applications starting last Thursday, a mere two weeks before the expected launch date for the products.
The decision to enable UK retail investors to engage in Bitcoin and Ether investments through regulated, exchange-listed products, instead of relying on avenues lacking regulatory approval, has been welcomed by investors in the UK. They have observed the substantial investments, totaling billions of dollars, made by their counterparts in the United States in similar offerings.
UK retail investors and the crypto industry have strongly advocated for gaining access to these products, expressing feelings of being excluded.
Bitcoin, the world’s leading cryptocurrency, has seen its value surge to $120,000, representing a twofold increase since October of the previous year. Support for the crypto industry from figures such as Donald Trump has driven prices of Bitcoin and Ether, among others, to new highs this year, prompting a surge of investors into the digital asset class.
Exchange-traded notes (ETNs) mirror an underlying index and are available for trading on established exchanges. Their functionality closely resembles that of exchange-traded funds (ETFs).
The FCA has historically adopted a stringent approach to cryptocurrency investments, primarily aimed at safeguarding investors from the inherent volatility and potential for fraud.
In March of 2024, the agency finally approved the listing of crypto ETNs on the London Stock Exchange, but initially restricted access to only institutional investors.
According to two individuals, the delay is tied to discussions between the regulator and the LSE regarding whether a specific section or segment is necessary for these retail-oriented products on the exchange. This matter is “under review,” one person stated.
These discussions and the resultant delays underscore the difficulties the UK is experiencing in establishing an effective framework for managing cryptocurrency products.
“We had to postpone prospectus reviews until the relevant segment was established on the LSE,” the FCA clarified. “This occurred on September 23, and we began accepting prospectus applications for review two days later.”
The regulator further explained that lifting the ban “empowers individuals to decide whether such a high-risk investment aligns with their personal financial circumstances.”
The FCA’s review process for each company’s prospectus could take several days and may involve requesting additional information, potentially pushing launch dates back to at least October 13, according to the sources. Once the regulator provides approval, the London Stock Exchange must also authorize their listing on the exchange platform.
Alex Watkins, who heads exchange-traded product business development at the London Stock Exchange, stated that this development will “offer retail investors additional avenues to diversify their investment portfolios.”
Due to the prior unavailability of crypto exchange-traded products, some retail investors have turned to investing in companies whose value is linked to crypto assets. Some of these are publicly traded in London, and have experienced dramatic price declines in recent weeks.