It may now become easier for UK investors to invest in crypto. The UK’s financial regulator, the Financial Conduct Authority (FCA), is working to remove the ban imposed on crypto exchange-traded notes (ETNs). After this decision, nearly $1 trillion in savings could flow into the crypto market.
ETNs are debt securities that track the price of an underlying asset. They are traded on stock exchanges, just like ETFs. The key advantage is that investors can profit from price movements without directly holding crypto assets.
As a reminder, in January 2021, the FCA imposed a ban on crypto ETNs and derivatives linked to unregulated assets. Due to this ban, retail investors were neither allowed to buy nor promote them. This ban is finally set to end on 8 October, and with this move, the UK could emerge as Europe’s largest crypto market.
“The UK has enormous potential to become a major crypto market within Europe, especially if self-invested and individual savings accounts are permitted under personal pension accounts,” said Dan Gold, founder of Stratiphy, in an interview.
Tax-free accounts could further accelerate demand.
The biggest question is whether crypto ETNs will be eligible for tax-free investment accounts. Investors can invest through ISAs and SIPPs, where capital gains tax does not apply. However, such investments must be made only through regulated exchanges.
According to government data from 2023, these accounts already hold a massive volume of assets. If ETNs become eligible, even a small allocation to crypto could inject substantial capital into the market.
At present, there is no clear picture regarding eligibility. UK fintech firm Freetrade is awaiting official clarification from HMRC, the tax authority.
“As far as we understand, only Bitcoin and Ethereum ETNs will be available, and we are planning to offer only those options to our users,” said Alex Campbell, Head of External Affairs at Freetrade.
Crypto regulation back in the spotlight
This policy shift coincides with UK regulators’ renewed focus on digital assets following the 2024 general election. A cross-party group in Parliament intensified its efforts in August to prioritize crypto regulation.
The FCA launched a consultation on new crypto regulations in September. A few days later, a joint task force between the US and the UK was established to cooperate on financial surveillance and crypto regulation.
Investor interest is growing.
New research indicates that lifting the ban could trigger a significant surge in crypto participation. Norstat surveyed the trading platform IG, involving 2,500 investors. The study showed that nearly 30% of investors are open to investing in crypto through ETNs.
This represents a sharp increase compared to current conditions. According to an FCA report from late 2024, only 12% of UK adults owned crypto at that time.
“We believe interest in crypto will grow quickly, particularly among younger people who are already familiar with digital assets,” said Michael Healy, UK Managing Director at IG. “This change could mark the start of a new phase where crypto becomes a more widely accepted investment option in the UK.”
IG plans to roll out crypto ETNs for clients in the coming months. Stratiphy and Freetrade also intend to list ETNs as soon as regulations permit.
A new crypto option on familiar platforms
For many investors, the most significant advantage of ETNs is that they trade on regulated exchanges, which provides greater security. Compared to buying crypto directly, ETNs will appear alongside stocks and other traditional investments, making them easier to access.
“This simple way of investing in cryptocurrency is more appealing to many people than opening an account on a separate crypto exchange,” Campbell said.
Although the FCA is lifting some restrictions on ETNs, crypto ETFs will still not be allowed for now. Even so, this regulatory shift could fundamentally reshape how British savers invest in crypto and open the door to one of Europe’s most significant new investment opportunities.
