FCA Greenlights Institutional Crypto ETN Market in UK, Retail Ban Remains

The UK‘s Financial Conduct Authority (FCA) has opened avenues for institutional investors to develop a market for crypto-backed Exchange-Traded Notes (ETNs), stating that these products would be accessible to professional investors while retail consumers remain prohibited from trading them.

The regulator has expressed no objections to the establishment of a crypto asset-backed ETN market for professional investors. However, it emphasized that these crypto-backed products are not suitable for retail investors, who are still restricted from trading such products, as per the FCA’s statement.

The London Stock Exchange has announced its readiness to accept applications for bitcoin and ether-backed ETNs in the second quarter of 2024.

The FCA clarified in a press release that it would not oppose requests from Recognized Investment Exchanges (RIEs) to establish a listed market segment for crypto asset-backed ETNs, signaling the growing institutionalization of cryptocurrency markets.

These ETNs, which are a type of exchange-traded product typically issued by banks or investment managers to track underlying indices or assets, will be available to professional investors, including investment firms and credit institutions, according to the FCA.

Exchanges planning to offer these products will be tasked with ensuring adequate controls are in place to maintain orderly trading and provide proper protection for professional investors, as stated by the regulator.

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