Overview
In a significant regulatory shift, the UK’s Financial Conduct Authority (“FCA”) has proposed lifting the ban on offering crypto exchange-traded notes (“cETNs”) to retail investors. This marks a notable evolution in the UK’s regulatory stance on cryptoassets and aligns more closely with international markets where such products are already accessible to individual investors. The FCA’s proposal is part of a broader strategy to support the growth and competitiveness of the UK’s digital finance sector while maintaining appropriate safeguards for retail participants.
If adopted, the changes will permit cETNs to be traded on FCA-recognised investment exchanges and made available to retail clients, provided firms adhere to the applicable financial promotion rules under COBS 4 and PS22/10. These rules are designed to ensure that consumers receive fair, clear and non-misleading information and are protected from undue influence or mis-selling.
While the FCA continues to stress that cETNs are high-risk investments, and warns investors they could lose their entire investment, the regulator believes that enabling access, coupled with appropriate disclosures, empowers consumers to make informed decisions in a maturing market.
Regulatory Context and Rationale
The FCA initially banned the sale of crypto derivatives and cETNs to retail consumers in January 2021 (see FCA Policy Statement PS20/10) due to concerns about extreme volatility, market abuse and consumer harm. However, the market has since evolved, prompting a reassessment of regulatory measures.
In March 2024, the FCA allowed recognised investment exchanges to create UK-listed segments for cETNs, restricted to professional investors. The June 2025 proposal expands this access to include retail investors, signalling a recalibrated approach that reflects developments in market maturity and investor understanding.
David Geale, the FCA’s Executive Director of Consumers and Competition, remarked that lifting the ban will “allow people to decide whether a high-risk investment is right for them.” It is important to note that the ban on crypto derivatives for retail clients remains in place, reflecting the FCA’s nuanced view of differing levels of product complexity and associated risk.
Implications for Firms and Investors
Should the proposal be adopted, FCA-recognised investment exchanges will be permitted to list cETNs for retail trading. Firms marketing these products must comply with enhanced financial promotion requirements, including those under the Financial Services and Markets Act 2000 (“FSMA”), the FCA’s Perimeter Guidance (“PERG”), and the new cryptoasset financial promotions regime (PS22/10 and GC23/1).
Firms will be expected to:
- Issue clear and balanced risk disclosures.
- Avoid misleading statements and aggressive sales tactics.
- Ensure promotions are fair, clear and not misleading under COBS 4.
This proposed development fits within the FCA’s broader digital assets roadmap, which includes ongoing consultations on:
- Stablecoin regulation.
- Custody requirements for cryptoassets.
- Prudential requirements for firms engaging in crypto-related services.
Collectively, these measures aim to build a comprehensive regulatory framework that balances innovation with consumer protection and financial stability.
Retail investors would gain access to a new avenue for portfolio diversification. However, the FCA’s stance remains clear: these instruments carry significant risk, and individuals should assess their risk appetite and investment objectives carefully before engaging. The FCA will continue monitoring market developments, suggesting further regulatory adjustments may follow as the sector evolves.
Broader Economic and Policy Considerations
The FCA’s announcement is part of a broader Quarterly Consultation Paper (CP24/10), aimed at reducing regulatory burdens while enhancing the UK’s appeal as a global financial centre. Other proposals in the consultation include:
- Streamlining reporting obligations for fund value assessments, with projected cost savings for over 149 firms managing more than 3,900 funds.
- Removing outdated data submission requirements, thereby reducing compliance costs for a majority of regulated entities.
These proposals reflect the FCA’s dual strategic objectives: to protect consumers and promote effective competition in financial markets. By lifting the ban on cETNs, the FCA demonstrates a willingness to modernise its regulatory toolkit in support of the UK’s digital finance ambitions.
This policy direction also complements wider government initiatives under the Financial Services and Markets Act 2000 (as amended by the Financial Services and Markets Act 2023), which empower the FCA to recognise investment exchanges and uphold market integrity and consumer protection standards.
Conclusion
The FCA’s proposal to lift the retail ban on cETNs signifies a strategic shift in UK cryptoasset regulation. It represents a carefully balanced move — encouraging innovation while preserving strong consumer safeguards. Firms will be required to meet high standards in financial promotions, and investors must remain vigilant when evaluating these high-risk products.
As the UK continues to position itself as a competitive hub for digital finance, this development could accelerate the mainstream integration of crypto-linked instruments into retail portfolios. However, the FCA’s emphasis on robust oversight and risk awareness underscores a deliberate and measured approach.
How Complyport Can Help
At Complyport, our experienced team continually monitors the evolving regulatory landscape and supports clients in achieving robust and tailored compliance outcomes. We offer comprehensive cryptoasset compliance support in areas including:
- Digital assets, cryptocurrencies and exchanges
- Advisory on financial promotions under PS22/10 and COBS 4
- FCA authorisation and registration support, including preparation of regulatory business plans, drafting policies and procedures and managing the application process end-to-end
- Ongoing compliance monitoring and post-registration support
- Development of AML and KYC frameworks, including mandatory annual business-wide risk assessments under MLR 2017
- Regulatory gap analysis and training for cryptoasset service providers
Book a meeting with one of our Subject Matter Experts today to understand how we can help you navigate the FCA’s evolving cryptoasset regime.
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