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The UK administration has ultimately removed its restriction on cryptocurrency exchange-traded notes, referencing an evolution of the sector and an improved comprehension of digital asset offerings.
In a revelation on Wednesday, the Financial Conduct Authority (FCA) detailed that individual investors can now access crypto ETNs through FCA-sanctioned exchanges located in the UK.
A crypto exchange-traded note is a debt instrument enabling an investor to attain exposure to a cryptocurrency without possessing the underlying asset. These varieties of products are essentially traded in a manner akin to any other security, with foundational crypto securely held by regulated custodians.
“Since we limited retail access to crypto ETNs, the marketplace has transformed, and products have become more popular and comprehensible. Therefore, we’re offering consumers greater options while ensuring protective measures are implemented,” stated David Geale, FCA executive director of payments and digital finance, as part of the announcement.
The crypto ETN prohibition initially took effect in January 2021, with the FCA asserting that it deemed “these products to be inappropriate for retail consumers due to the risks they present.” It also contended that there was a “lack of valid investment necessity” for these crypto products at the time.
The latest action by the FCA signals a considerable change in approach, as the government has gradually embraced the crypto domain over the previous few years. The nation is anticipating the launch of a comprehensive framework following a shift in governmental leadership in July.
As part of the announcement, the FCA also remarked that its restriction on “retail access to cryptoasset derivatives will persist,” adding that it will continue to monitor “market trends and assess its stance on high-risk investments.”
Crypto ETNs permitted in retirement funds
Alongside the removal of the crypto ETN ban, the UK government also published a policy statement regarding the tax treatment for these crypto assets in particular types of tax-advantaged investment accounts.
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Effective from Oct. 8, the government will permit crypto ETNs to be contained within “registered pension schemes,” and from April 2026 will extend access for Stocks & Shares Individual Savings Accounts, providing citizens with several tax-incentivized investment opportunities for these products.
“The government remains committed to the UK’s burgeoning cryptoasset industry and continues to formulate a comprehensive regulatory framework that promotes innovation while safeguarding consumers,” the statement indicates.
Market poised for expansion with crypto ETNs
A recent study conducted by IG Group forecasts that the UK cryptocurrency market could expand by up to 20% following the reintroduction of crypto ETNs.
The report based this forecast on its own analysis, which revealed that “30% of UK adults would contemplate investing in crypto through ETNs,” with the main attraction being the “perceived safety and regulatory oversight” provided by these offerings.
“This indicates a substantial potential increase from current levels of crypto ownership — 12%, according to the FCA’s latest research, and 25% according to IG’s new survey.”
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