UK Financial Authority to Permit Trading of 'Virtual Asset ETNs' for Retail Investors

The Financial Conduct Authority (FCA) in the UK has lifted the ban on trading virtual asset (cryptocurrency) exchange-traded notes (ETNs) for retail investors. From October 8, companies in the UK will be able to offer virtual asset ETN products to general consumers.

According to the crypto-focused media outlet Cointelegraph on the 1st (local time), the FCA explained the reasoning behind this measure by stating that “markets and products have become more mainstream, and the level of understanding has increased.”

David Geale, Director of Payments and Digital Finance at the FCA, said, “The ban was imposed in the past due to extreme volatility and lack of necessity for retail investment, but the environment has now changed.”

Unlike exchange-traded funds (ETFs), virtual asset ETNs do not directly hold underlying assets and are traded as debt securities issued by the issuer. Through this, investors can earn returns linked to virtual assets using their existing brokerage accounts. However, since there is no direct control over the underlying assets, investing through a reliable institution is recommended.

Meanwhile, the FCA still prohibits retail investors from accessing virtual asset derivatives. The FCA stated, “We will continue to review our approach towards high-risk investment products.”