Regulatory Advancements in Cryptocurrency: FCA Moves Towards Lifting Ban on cETNs
The Financial Conduct Authority (FCA) of the United Kingdom has officially announced the lifting of the ban on offering Crypto Exchange Traded Notes (cETNs) to retail investors, with the regulatory changes set to come into effect on October 8, 2025. This decision marks a significant milestone for the UK's crypto industry, allowing retail investors to buy, sell, and invest in cETNs that are admitted to trading on FCA-approved Recognised Investment Exchanges (RIEs).
The initial ban on retail sales, marketing, and distribution of cETNs was introduced in January 2021 due to the inherent risks and volatility associated with crypto assets. In June 2025, the FCA issued Consultation Paper 25/16 (CP25/16) proposing to lift the ban for cETNs listed on UK RIEs and categorizing these cETNs as Restricted Mass Market Investments (RMMIs).
Under the new rules, marketing restrictions, mandatory risk warnings, appropriateness testing to ensure suitability for retail investors, and adherence to the Consumer Duty principles to protect retail consumers from foreseeable harm will be enforced. Despite allowing retail access, cETNs remain high-risk investments, with no protection under the Financial Services Compensation Scheme (FSCS), meaning investors could potentially lose all their funds if the crypto exchange or platform fails.
The FCA's decision to rebalance its approach to risk aims to align UK regulation with evolving market conditions and investor protection standards seen in other jurisdictions. However, it's important to note that these products cannot be reliably valued by retail consumers.
The FCA's regulatory framework for crypto assets continues to evolve, with the authority recently outlining its crypto roadmap, publishing proposals on stablecoins, and simplifying reporting requirements for funds' assessments of value. This has led to significant cost savings for 149 firms managing more than 3900 funds.
Despite this development, many in the cryptoasset industry remain disappointed by the FCA's decision. The authority has repeatedly warned about the risks associated with cryptocurrencies and tokens, emphasizing the potential for harm to retail consumers. Charles Randall, Chair of the FCA, has urged caution when investing in speculative tokens.
In conclusion, the FCA's lifting of the ban on cETNs cautiously reopens retail access to these high-risk instruments under stricter regulatory safeguards, effective October 8, 2025. The FCA's stance on the ban of retail access to cryptoasset derivatives remains unchanged.
[1] FCA Press Release: FCA proposes to lift the ban on offering crypto exchange traded notes (cETNs) to retail investors (8 June 2025) https://www.fca.org.uk/news/press-releases/fca-proposes-lift-ban-offering-crypto-exchange-traded-notes-cetns-retail-investors
[2] FCA Consultation Paper 25/16: Cryptoassets: policy statement PS25/16 (8 June 2025) https://www.fca.org.uk/publications/policy-statements/ps25-16-cryptoassets-policy-statement
[3] FCA Policy Statement PS25/16 (8 June 2025) https://www.fca.org.uk/publications/policy-statements/ps25-16-cryptoassets-policy-statement
[4] FCA Press Release: FCA sets out its approach to high-risk investments (8 June 2025) https://www.fca.org.uk/news/press-releases/fca-sets-out-its-approach-high-risk-investments
[5] FCA Consultation Paper 25/16 (8 June 2025) https://www.fca.org.uk/publications/consultation-papers/cp25-16-cryptoassets-consultation-paper
- The FCA's decision to lift the ban on offering Crypto Exchange Traded Notes (cETNs) to retail investors in October 2025 will allow for regulation of these high-risk events in the finance sector, given the volatile nature of crypto assets.
- The new regulations for cETNs, which include marketing restrictions, mandatory risk warnings, appropriateness testing, and adherence to the Consumer Duty principles, aim to ensure investing in these products is done with full awareness of the associated risks.
