UK Lifts Ban on Bitcoin and Crypto ETFs

FCA lifts ban on crypto ETFs

The FCA has announced that the ban imposed since 2019 on the sale of exchange-traded funds (ETNs) and crypto-related derivatives to retail investors will be lifted. This decision will allow retail investors in the UK to buy ETNs related to Bitcoin and Ethereum, as long as the products are listed on FCA-approved exchanges, such as the London Stock Exchange (LSE).

Previously, in March 2024, the FCA relaxed regulations, allowing professional investors (such as financial institutions and investment banks) to trade ETNs related to Bitcoin and Ethereum. However, the ban on retail investors remained in place due to concerns about the high risk and volatility of cryptocurrencies. The latest decision was explained by David Geale, FCA's CEO of payments and digital assets, as an effort to "rebalance the risk approach", allowing investors to make their own decisions about investing in these high-risk financial products, provided they are fully informed about the possibility of losing all their capital.

The Shift in UK Cryptocurrency Policy

The UK has long taken a cautious approach to cryptocurrencies. In 2019, the FCA banned the sale of ETNs and crypto derivatives to retail investors, citing the products as “unsuitable” due to high risks, including price volatility, the risk of fraud, and a lack of regulation.

Meanwhile, other major markets like the US, Canada, and Australia have allowed spot Bitcoin ETFs since early 2024, attracting billions of dollars in investment, with funds like BlackRock and Fidelity recording $10 billion in inflows in just a few months.

The FCA’s move comes as the UK government, under Prime Minister Keir Starmer, aims to turn the country into a global digital asset hub. In April 2025, the UK Treasury published draft legislation to bring cryptocurrency-related activities under financial regulation, with plans to implement a full regulatory framework by 2026. The decision to lift the ETF ban is part of this roadmap, aimed at increasing the competitiveness of the UK’s digital finance industry and catching up with hubs like the US.

Global competition and regulatory pressure

The FCA’s decision reflects the UK’s efforts to avoid falling behind the US, where spot Bitcoin ETFs have attracted large inflows. However, the UK has maintained a more cautious approach than the US, allowing only ETNs (debt securities) rather than ETFs (funds that hold physical assets). Russ Mould, investment director at AJ Bell, said the move was not a “complete reversal” of the FCA’s stance, as the regulator still warns investors about the risk of losing all their capital.

The decision also reflects coordination with the US, where Finance Minister Scott Bessent – ​​a crypto supporter – has been in discussions with UK Finance Minister Rachel Reeves on digital asset regulation, suggesting that the UK is aligning its policy with the US’s “cryptocurrency as security” approach, rather than the EU’s separate regulatory framework (MiCAR).

Evaluation and Conclusion

The FCA’s lifting of the ban on Bitcoin and crypto ETNs for retail investors is a major step forward in moving the UK closer to becoming a global digital asset hub. Not only does this open up opportunities for retail investors, it also promotes the integration of cryptocurrencies into the traditional financial system. However, with warnings about risks and strict regulatory requirements, investors should be cautious when entering this volatile market.

This is a positive sign for the crypto industry, but its success will depend on how the FCA balances innovation and investor protection. Can the UK catch up with the US as a digital asset hub? Stay tuned for the latest developments!

Once again we give our opinion on potential projects in the crypto market. This is not investment advice, consider your portfolio. Disclaimer: The views expressed in this article are solely those of the author and do not represent the platform in any way. This article is not intended to be a guide to making investment decisions.

Compiled and analyzed by HCCVenture

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