UK Lifts Ban on Crypto Exchange-Traded Notes as Market Matures

On October 8, 2025, the Financial Conduct Authority (FCA) lifted its ban on crypto exchange-traded notes for everyday investors, ending a four-year restriction that started in January 2021.

The regulatory change allows UK residents to invest in crypto through regulated products traded on approved exchanges like the London Stock Exchange. David Geale, the FCA’s executive director of payments and digital finance, explained the shift: “Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood.”

What Are Crypto ETNs?

Exchange-traded notes are debt products that track cryptocurrency prices without requiring investors to own the digital assets directly. Unlike holding Bitcoin or Ethereum in a digital wallet, ETNs work like traditional securities. Regulated custodians hold the underlying crypto, while investors buy and sell notes that mirror the price movements.

This structure differs from exchange-traded funds (ETFs), which remain banned for UK retail investors. ETNs are debt instruments issued by financial institutions, while ETFs typically hold assets directly. The FCA stated its regulatory framework would need updates before allowing retail access to crypto ETFs.

Massive Growth Expected

Research from IG Group predicts the UK crypto market could grow by 20% following this change. Their survey found 30% of UK adults would consider investing in crypto through ETNs—a substantial jump from current ownership levels of 12%, according to FCA data.

Young investors show particularly strong interest. Half of people aged 18-24 said they would consider crypto ETN investments, along with 49% of those aged 25-34. The appeal centers on regulated access and the ability to hold these products in tax-advantaged accounts.

Tax Benefits Draw Investor Interest

One major advantage sets crypto ETNs apart from direct crypto purchases: tax treatment. The UK government announced that crypto ETNs can be held in registered pension schemes immediately. For Individual Savings Accounts (ISAs), the rules are more complex.

Until April 6, 2026, investors can purchase crypto ETNs in standard stocks and shares ISAs. After that date, they’ll only qualify for Innovative Finance ISAs. This gives investors a limited window to add crypto exposure to their regular ISA accounts, where gains aren’t subject to capital gains tax.

Self-Invested Personal Pensions (SIPPs) can now hold crypto ETNs as well, allowing investors to gain crypto exposure while benefiting from pension tax relief. Direct cryptocurrency holdings remain ineligible for both ISAs and pensions.

Major Asset Managers Line Up

BlackRock, the world’s largest asset manager, is preparing to offer its iShares Bitcoin product for retail trading in the UK. Swiss-based 21Shares, which already lists crypto ETNs for professional investors on the London Stock Exchange, partnered with digital platform Stratiphy to serve retail customers.

WisdomTree’s Head of Distribution in Europe, Adria Beso, said the firm expects UK-listed crypto products “to become the preferred vehicle for investors.” Other companies preparing offerings include VanEck, Bitwise, DWS, and Deutsche Digital Assets.

Russell Barlow, CEO of 21Shares, called the regulatory shift “a huge step toward embracing innovation,” noting that 12% of UK adults already hold crypto through unregulated platforms.

Implementation Hurdles

Despite the October 8 effective date, retail investors face delays in actually purchasing these products. The FCA only began accepting prospectuses on September 23—just two weeks before the ban lifted. The London Stock Exchange and FCA continue working through operational details, including whether a new trading segment is needed.

Laurent Kssis, director at CEC Capital, criticized the rollout: “The FCA announced in August that the ban would lift on October 8th, yet here we are on launch day discovering that investors may have to wait nearly a week longer.”

The delay highlights the UK’s struggle to keep pace with other markets. European exchanges handled €26 billion in crypto ETN trading in 2024, while UK trading volumes represent just 0.59% of total European activity, averaging £624,000 daily.

Consumer Protections and Risks

The FCA implemented several safeguards. Financial promotion rules apply to prevent misleading advertising. The Consumer Duty standards require firms to ensure products suit their customers’ needs. All ETNs must trade on FCA-approved exchanges.

However, investors should understand the risks. ETNs are unsecured debt instruments, meaning they depend on the issuer’s creditworthiness. They’re not covered by the Financial Services Compensation Scheme, which protects bank deposits. Investors could lose all their money.

The FCA maintained its ban on crypto derivatives like futures and options for retail investors, citing ongoing concerns about these high-risk products.

Broader Regulatory Context

This change fits into the UK’s larger plan to become a global crypto hub. The government published draft legislation in April 2025 aiming to make Britain a “world leader in digital assets.” The FCA is developing comprehensive rules covering stablecoins, trading platforms, and custody services, with full implementation expected in 2026.

The UK and US also announced a partnership in September 2025, creating the “Transatlantic Taskforce for Markets of the Future” to develop shared crypto policies. The task force has 180 days to create recommendations for both governments.

The timing reflects broader global shifts. The US approved spot Bitcoin ETFs in January 2024, which have grown to manage around $150 billion in assets within their first year. With Bitcoin trading above $122,000 in October 2025, demand for regulated crypto access has intensified.

The Path Forward

The FCA’s decision signals a careful balance between enabling innovation and protecting consumers. Ian Taylor, board adviser to digital assets trade association CryptoUK, noted: “Until now, the UK has been an outlier on ETNs. We hope this move will improve consumer protections.”

Michael Healy, UK Managing Director at IG, expressed optimism about adoption: “With ETNs set to launch, we expect a surge in crypto adoption—especially among younger generations already comfortable with digital assets.”

The regulatory framework is still developing. The UK’s broader approach includes proposals for cryptocurrency custody services and stablecoin regulations, creating more comprehensive consumer protections for digital asset investments.

As platforms work through implementation details and asset managers prepare their offerings, the coming months will reveal whether this regulatory shift delivers on its promise to expand crypto access while maintaining investor safeguards.