Starting tomorrow, retailers in the United Kingdom can purchase Bitcoin exchange-traded notes (ETNs). This investment vehicle offers investors indirect exposure to Bitcoin. It has been banned in the country since 2021.

Experts welcome the initiative taken by the UK’s financial services regulator. They warn, however, that the move falls short of offering direct access to cryptocurrencies.

UK Reverses Four-Year Crypto ETN Ban

On October 8, the UK’s Financial Conduct Authority (FCA) will lift its ban on crypto ETNs for retail investors. The change is a major turning point in the UK’s approach to digital assets, reversing a four-year-old restriction.

An exchange-traded note (ETN) is an unsecured debt security issued by a financial institution. It is designed to track and expose investors to the returns of a specific index or market benchmark. 

Specifically, the FCA’s reversal will permit retail investors to access ETNs referencing Bitcoin or Ethereum. These products must be listed on a recognized investment exchange, such as the London Stock Exchange. They will also be subject to strict listing, disclosure, and distribution standards. 

For those not ready to invest directly in cryptocurrencies, an ETN offers a simpler vehicle, as buying the note does not require direct ownership of the underlying crypto asset.

“Access matters, and lifting the ETN restriction is a welcome step in the right direction, said Susie Violet Ward, CEO of Bitcoin Policy UK, adding, “What is important now is that the UK builds on this momentum.”

The FCA’s reversal marks a shift from outright prohibition to a strategy of regulated inclusion.

‘Symbolic Gesture’: Why an ETN Isn’t Enough

In recent years, the United Kingdom has lagged in the global competition to become a dominant hub for digital assets. Critics have specifically targeted the country’s financial services regulator for overregulation, which is seen as stifling innovation.

In 2021, the FCA prohibited selling, marketing, and distributing derivatives and ETNs referencing cryptoassets to all retail consumers. It cited concerns like extreme volatility, valuation difficulty, and market abuse. 

Though the ban on ETNs has been reversed, the prohibition of derivatives like options and futures remains in place for retail investors due to ongoing concerns over consumer protection. 

According to Ward, the FCA’s previous restrictive approach did not effectively protect consumers but merely curtailed their choices and market access.

“The UK has fallen behind not because of a lack of interest in Bitcoin but because of overregulation that has stifled innovation and driven opportunity offshore. The FCA’s approach has not protected consumers, it has limited them,” Ward told BeInCrypto.

She added that reversing the crypto ETN ban will not be enough to boost the UK’s global competitiveness meaningfully.

“An ETN is a debt instrument, not a spot Bitcoin ETF. It is an odd choice to reopen the door through a more complex, credit-linked product rather than one backed by the underlying asset itself. Still, it is progress.”

The natural next step for her would be to allow retailers to access crypto assets directly. 

“Allowing properly structured and transparent spot Bitcoin products would demonstrate genuine commitment to financial innovation and consumer choice. We should not settle for symbolic gestures when there is an opportunity to lead,” Ward concluded.

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