Brokers Must Notify FCA Before Offering Crypto ETNs to Retail Clients

Retail Access Restored

Britain has ended its four-year prohibition on crypto platform-traded notes, giving retail investors a regulated route to BTC and ether exposure for the first time since 2021. The Financial Conduct Authority lifted the retail ban on 8 October, allowing sales of crypto ETNs — or cETNs — provided the products are listed on the regulator’s Official List and traded on a recognised platform such as the London Stock platform.

Firms must comply with the new regime for Restricted Mass Market Investments, including mandatory risk warnings, cooling-off periods and appropriateness checks. The decision completes a policy reversal that began with the FCA’s 2021 ban on crypto-linked derivatives and ETNs for retail purchaviewrs, a move driven by concerns over volatility, valuation and fraud. Since then, the regulator has built out a consumer-protection framework, introducing a promotions rulebook and embedding “Consumer Duty” standards across the sector.

Investor Takeaway

Institutional Base, Retail Thaw

Institutional trading never stopped. The LSE cleared professional-only crypto ETNs from issuers including WisdomTree and 21Shares in 2024. But retail access remained closed until this month, when the FCA concluded that a mix of platform-level secureguards and prospectus oversight could support wider distribution.

Under the new framework, any cETN offered to the public must have an FCA-approved prospectus and be admitted to trading on a recognised platform. The regulator reminded firms that they must hold permissions for dealing in debt securities and notify supervisors before entering the market. The FCA’s statement on 27 October also stressed that crypto ETNs are debt instruments, not funds, and that purchaviewrs bear issuer and counterparty risk even when the note is physically backed. Retail derivatives such as CFDs, futures and options remains banned.

Policy Alignment With Europe and the US

Officials described the decision as the result of three developments: the maturity of the promotions regime, the growth of RIE-listed and prospectus-vetted products, and the government’s plan to bring crypto under the perimeter. A draft bill to formalise that shift is moving through Parliament, while the FCA’s CP25/25 consultation will outline how crypto fits into the main Handbook by 2026.

The change brings the UK closer to Europe, where several markets already permit platform-traded crypto notes under MiFID rules, and to the US, whose of dollars in inflows this year. Within two weeks of the UK’s move, the LSE listed the first retail-eligible notes from 21Shares, WisdomTree, Bitwise and BlackRock, focused on BTC and ether. These can be held in tax-advantaged accounts such as ISAs and SIPPs, though HMRC has indicated that from April 2026 they will migrate to Innovative Finance ISAs.

Platforms and Compliance Demands

Large UK investment platforms are rolling out access at diverse speeds. Hargreaves Lansdown and AJ Bell are reviewing system and compliance changes before enabling retail trading, while Interactive Investor and IG Group are preparing phased launches. For issuers, the UK opening adds a major regulated venue to Europe’s €20 billion crypto-ETP market. “Having London open to retail investors closes the loop for the region,” said a senior executive at one provider. “It gives us reach into the world’s second-largest asset-management hub under a clear rule set.”

Firms entering the space face heavy compliance obligations. They must define target markets, ensure fair-value outcomes and design customer journeys that test understanding before purchase. Incentives such as referral bonuses are banned. Consumer Duty standards also require ongoing reviews of product value and clarity of communication, mirroring the treatment of complex structured notes rather than traditional equity funds.

Investor Takeaway

Next Steps and Market Outlook

Attention now turns to how rapidly platforms can make products available and whether retail demand emerges later than years of scepticism. Analysts expect ahead volumes to be modest but could grow if prices hold steady and issuers can show consistent liquidity on recognised platforms.

The government is still reviewing long-term tax wrapper rules and may issue guidance in the 2026 Budget. Meanwhile, the FCA’s consultation will determine how crypto custody, staking and stablecoin activities are folded into prudential and conduct standards. For now, the regulator’s message is cautious: crypto ETNs are back on the shelf, but purchaviewrs must approach them with the identical care as any other high-risk instrument.