The UK plans to lift the ban on crypto ETNs, striving to become a global leader in digital assets

The United Kingdom is preparing to lift a long-standing ban on crypto financial products - crypto exchange-traded notes (ETNs), which is seen as an important step to make up for its lag behind the United States and Europe in the global crypto market. The UK government and financial regulators state that lifting the ban will help strengthen the country's position as a global hub for digital assets.

FCA Proposal: Removing Restrictions on Retail Investors Buying Crypto ETNs

The UK Financial Conduct Authority (FCA) released a proposal last Friday (early June), planning to lift the ban on retail investors buying crypto ETNs that has been in place since 2019. ETNs are debt instruments whose prices are linked to specific assets (in this case, cryptocurrencies), allowing investors to indirectly participate in the digital currency market through regulated exchanges.

Previously, the FCA had imposed comprehensive restrictions on such products due to "potential consumer risks". However, this time they have changed their stance, explicitly stating that easing the ban is to "support UK economic growth and competitiveness".

Only Lifting ETNs Ban, Crypto Derivatives Prohibition Remains

It is worth noting that this proposal only involves ETNs and does not include higher-risk crypto derivatives. The FCA states that the latter will still maintain its ban, as the risk assessment results are still unfavorable for opening the retail market.

David Geale, Executive Director of Payments and Digital Assets at the FCA, stated: "We want to strike a balance between risk management and market growth, allowing investors to choose whether to participate in such high-risk investments based on their own risk tolerance."

Industry Experts Optimistic: UK Finally Not Falling Behind

For the crypto industry, the FCA's change in attitude is highly encouraging. Industry professionals believe that the UK has long been conservative in digital asset regulation compared to the US and EU, leading to the marginalization of its local market and innovation ecosystem.

Ian Taylor, advisor to CryptoUK, pointed out: "The UK was previously one of the few countries with a comprehensive ban on crypto ETNs. This policy shift is expected to improve investor protection and give us an opportunity to promote further opening of the crypto derivatives market."

Kraken: Market Mature, Restrictions Should Evolve

Bivu Das, UK General Manager of crypto exchange Kraken, directly stated that this proposal is an important milestone for the UK crypto ecosystem.

He said: "This represents the regulators' acknowledgment that the market has significantly matured and past restrictive measures are no longer appropriate. If the UK wants to remain competitive in the global digital asset landscape, it must continue to make such open decisions."

UK Plans to Establish Comprehensive Crypto Regulatory System by 2026

This proposal also aligns with the UK government's broader crypto policy roadmap. In April this year, the government has already published a draft plan to establish a comprehensive crypto asset regulatory framework, with the goal of implementation by 2026.

The FCA is currently simultaneously releasing various consultation and discussion documents covering regulatory models for crypto exchanges, wallet service providers, and new asset classes, intending to create a regulatory environment on par with traditional finance.