The Financial Conduct Authority (FCA) in the UK has made a significant move towards mainstream crypto adoption by lifting a three-year ban on retail trading of crypto exchange-traded products (ETPs). This decision, announced on October 8, overturns a previous restriction that was put in place in January 2021 due to concerns over volatility and consumer protection.
The lifting of the ban means that retail investors in the UK will now have access to crypto exchange-traded notes (ETNs) on approved exchanges such as the London Stock Exchange starting on October 16. This marks a new phase for regulated crypto investment in Europe’s largest financial market.
Initially, eligible ETNs will cover popular cryptocurrencies like Bitcoin and Ethereum, and all trading will take place through authorized UK-based investment exchanges with consumer safeguards in place.
This decision by the FCA is seen as a policy breakthrough and a catalyst for new inflows into the market. Bradley Duke, Bitwise’s head of Europe, described it as “incredibly positive” and highlighted the UK’s position as Europe’s largest investment base. The entry of retail capital is expected to unlock a significant amount of demand that has been sidelined since 2021.
The impact of this move goes beyond just access to crypto ETPs. The HM Revenue & Customs (HMRC) has confirmed that crypto ETNs will be considered qualifying investments for the Innovative Finance ISA from April 2026. This means that UK investors can now hold crypto ETPs in tax-advantaged accounts such as Individual Savings Accounts (ISAs) and pension schemes.
This development could lead to a reshaping of retail participation in the crypto market, as UK investors are incentivized to hold Bitcoin in their pension funds. With Britons holding around £872 billion in ISA accounts, even a small percentage of this capital allocated to crypto ETPs could result in significant inflows, potentially shifting the global market share of crypto exposure.
Despite the positive outlook, there are still skeptics in the industry. Hargreaves Lansdown, the largest investment platform in the UK, has expressed concerns about the inclusion of cryptocurrencies in investment portfolios, citing issues with performance analysis and intrinsic value.
Nevertheless, momentum around crypto investment products continues to grow globally. In the US, spot Bitcoin ETFs have attracted significant inflows since their launch in 2024, and global crypto funds have seen substantial new capital inflows this year. Traditional financial institutions like BlackRock and Morgan Stanley are also advising investors to consider allocating funds to cryptocurrencies.
Overall, the lifting of the ban on retail trading of crypto ETPs in the UK represents a significant step towards mainstream adoption of cryptocurrencies and could have far-reaching implications for the market.