UK Government Reverses Ban on Crypto ETNs
In a significant development, the UK government has lifted its ban on crypto exchange-traded notes (ETNs), signaling confidence in digital assets and increasing investment opportunities. The Financial Conduct Authority (FCA) has confirmed that retail investors can now purchase crypto ETNs through FCA-approved exchanges across the United Kingdom.
A cryptocurrency ETN is a debt instrument providing exposure to a cryptocurrency without giving the investor direct control over the underlying assets. Customers trade them like a normal security while the crypto is held by a regulated custodian.
According to David Geale, FCA Executive Director of Payments and Digital Finance:
“Since limiting retail access to crypto ETNs, the market has matured and products are understood better. We give consumers more choice while providing essential protections.”
From Restriction to Opportunity
The prohibition on crypto ETNs started in January 2021 to protect retail investors from high-risk products deemed inappropriate at the time. Authorities cited two main concerns: potential harm to consumers and lack of genuine investment demand.
Britain’s policy shift reflects gradual acceptance of crypto assets by the UK government, driven by market evolution and increased investor awareness. While the FCA now permits retail access to crypto ETNs, it continues to ban crypto derivatives to mitigate risk.
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Crypto ETNs Should Be Held in Tax-Deferred Accounts
Alongside reversing the ban, the UK government issued guidance on the tax treatment of crypto ETNs in regulated investment accounts:
- October 8, 2025: Registered pension schemes can hold crypto ETNs.
- April 2026: Stocks & Shares ISAs will be allowed to include crypto ETNs, enhancing tax efficiencies for retail investors.
The government stated that these measures will support growth in the UK cryptoasset sector, while maintaining consumer protection and fostering innovation.
Growth Outlook and Market Potential
Industry analysts suggest that retail access to crypto ETNs could boost the UK crypto market by up to 20%. A study by IG Group found that 30% of UK adults would invest in cryptocurrencies if ETNs were available, with investors feeling safer in a regulated environment.
According to FCA data, current crypto ownership in the UK stands at around 12%, indicating significant untapped potential. Inclusion of ETNs in pension schemes and ISAs may drive further adoption among retail investors, offering regulated exposure to digital assets.
