Regulatory Shift: FCA Ponders Removing Ban on certificated Exchange Traded Notes (cETNs) in Crypto Sector
The Financial Conduct Authority (FCA) in the United Kingdom has announced a significant regulatory shift, lifting the ban on offering crypto exchange traded notes (cETNs) to retail investors, effective from 8 October 2025. This decision marks a step forward in the FCA's ongoing effort to establish a regulatory framework for cryptocurrencies.
In June 2025, the FCA published Consultation Paper 25/16, proposing to lift the ban and classify cETNs admitted to a UK Recognised Investment Exchange (RIE) as Restricted Mass Market Investments (RMMIs). The comment period on these proposals ended on 7 July 2025. On 31 July 2025, the FCA Board approved the Conduct of Business (Cryptoasset Products) Instrument 2025, which amends the FCA Handbook to enable the sale, marketing, and distribution of cETNs to retail clients under specified conditions.
The changes impose marketing restrictions, such as required clear and prominent risk warnings, an appropriateness test for investors, and obligations under the FCA’s Consumer Duty principles to act in customers’ best interests, avoid foreseeable harm, and ensure products are targeted appropriately to suitable investors. Only cETNs listed on FCA-approved RIEs, such as the London Stock Exchange or Cboe UK, are eligible to be marketed to retail investors.
Despite lifting the ban, the FCA emphasizes that crypto ETNs remain high-risk products with no Financial Services Compensation Scheme (FSCS) protection; investors could lose all their invested funds if the issuing platform collapses. This decision reflects the FCA’s assessment that crypto markets have matured sufficiently to allow retail access with enhanced investor protections and regulated distribution channels.
However, the FCA's ban on retail access to cryptoasset derivatives remains in place. The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. The FCA has also published proposals on stablecoins and other aspects of the crypto regime.
The FCA's decision to ban the sale of cryptoasset-linked derivatives and ETNs to retail customers is a setback for the UK in maintaining its dominant position as a global fintech hub. Many in the cryptoasset industry are left disappointed by the FCA's decision. Charles Randall, Chair of the FCA, has warned about the risks of holding speculative tokens, stating that they are not regulated by the FCA.
Financial promotion rules would apply to cETNs, providing consumers with information on risks and preventing inappropriate incentives. The FCA is also simplifying reporting requirements for funds' assessments of value, leading to a significant cost saving for 149 firms who manage more than 3900 funds. Additionally, the FCA is removing unnecessary data reporting, benefiting nearly all firms.
As the crypto market continues to evolve, the FCA's decisions and regulations will play a crucial role in shaping the industry's future in the UK. Retail investors should be aware of the risks involved and seek professional advice before investing in cETNs.
[1] Financial Conduct Authority (FCA). (2025). FCA publishes final rules on cryptoasset derivatives and exchange traded notes (ETNs) for retail consumers. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-publishes-final-rules-cryptoasset-derivatives-and-exchange-traded-notes-etns-retail-consumers
[2] Financial Conduct Authority (FCA). (2025). FCA lifts ban on crypto exchange traded notes (cETNs) for retail investors. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-lifts-ban-crypto-exchange-traded-notes-cetns-retail-investors
[3] Financial Conduct Authority (FCA). (2025). FCA consults on proposals to lift ban on crypto exchange traded notes (cETNs) for retail investors. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-consults-proposals-lift-ban-crypto-exchange-traded-notes-cetns-retail-investors
[4] Financial Conduct Authority (FCA). (2025). FCA publishes Policy Statement on cryptoasset derivatives and exchange traded notes (ETNs) for retail consumers. [online] Available at: https://www.fca.org.uk/publication/policy-statement/ps25-07
[5] Financial Conduct Authority (FCA). (2025). FCA consults on proposals to simplify reporting requirements for funds' assessments of value. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-consults-proposals-simplify-reporting-requirements-funds-assessments-value
- In the context of the FCA's regulatory shift, the Conduct of Business (Cryptoasset Products) Instrument 2025 requires financial promotion rules for crypto exchange-traded notes (cETNs), ensuring consumers receive information about risks and are protected from inappropriate incentives.
- Despite the ban on retail access to cryptoasset derivatives, the decision to lift the ban on cETNs for retail investors marks a step forward in the FCA's effort to establish a regulatory framework for cryptocurrencies, with conditions like marketing restrictions and adherence to the FCA’s Consumer Duty principles.
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