The UK Financial Conduct Authority (FCA) recently announced the end of its multi-year ban on retail investment in crypto exchange-traded notes (ETNs), allowing retail investors to purchase crypto assets such as Bitcoin and Ethereum on regulated stock exchanges. Crypto ETNs are exchange-traded notes linked to crypto assets and are similar to ETFs. Essentially, they allow investors to gain exposure to crypto assets through regulated exchanges. This policy change will take effect from October 16, 2025, and platforms such as the London Stock Exchange will begin trading these products upon approval. According to regulatory requirements, crypto asset ETNs listed on the London Stock Exchange must be fully backed by physical Bitcoin or Ethereum, and leverage is not permitted. The FCA stated that the market is maturing and that it will provide more investment options for qualified retail clients while protecting investors. According to a consumer survey by the UK Financial Conduct Authority (FCA), approximately 12% of UK adults will hold crypto assets by 2024. Despite the lifting of the ban, the FCA clarified that the retail ban on crypto derivatives trading will remain in place to control risks. As supporting measures, the UK tax authorities (HMRC) stated in a policy document that such qualified crypto-asset ETNs can be included in registered pension accounts and held tax-free from October 8, 2025; from April 6, 2026, such products will be classified as investments in the Innovative Finance ISA (IFISA) and continue to enjoy tax benefits. According to a UK government report, the cumulative size of UK residents' individual savings accounts (ISAs) is approximately £872 billion. Conservatively estimated, if 1% of these funds flow into crypto-asset ETNs, it would generate over £8 billion in new investment. Industry analysts believe the new policy is expected to stimulate demand for funds previously stranded due to regulatory restrictions, encouraging the UK's approximately 12 million cryptocurrency holders to allocate some of their assets to long-term investment accounts such as pensions. Bradley Duke, Head of Europe at Bitwise, a prominent asset management firm, stated that the move is "extremely positive" and will unlock retail funds that have been on the sidelines since 2021, helping the UK maintain its position as Europe's largest investment market. In contrast to the regulatory openness, Hargreaves Lansdown, a major UK retail investment platform, maintains a cautious and cautious stance toward crypto assets. In a statement, the company emphasized that despite a long-term rise in Bitcoin's price, it is accompanied by extreme volatility and lacks intrinsic value. "Bitcoin is not an asset class," and therefore should not be considered a core component of a financial portfolio. Hargreaves Lansdown noted that cryptocurrencies have historically exhibited "extreme losses," making it difficult for investors to establish reliable performance expectations and to rely on them as a means of achieving growth or returns. However, the company acknowledged that some clients have speculative needs and planned to gradually offer trading in London Stock Exchange-listed ETNs backed by physical Bitcoin and Ethereum to clients who have passed a compliance risk assessment in early 2026. According to regulatory requirements, these clients' crypto investment exposure will be subject to a 10% limit, and they will undergo detailed risk warnings and suitability reviews before trading. The pace of digital reform is accelerating. In addition to lifting the ban on ETN investment, the UK government has recently accelerated the development of digital financial infrastructure. The "Digitalization Strategy for Wholesale Financial Markets," released in July of this year, explicitly calls for the tokenization of traditional financial assets through blockchain technology, fundamentally transforming existing manual, paper-based processes. The strategy states that the tokenization of assets has the potential to achieve a qualitative change in market efficiency, for example, by increasing transparency and reducing operating costs through real-time sharing of transaction data. To promote the electronicization of securities certificates, the government established the De-Papered Markets Action Taskforce (DEMAT) to coordinate the elimination of physical stock certificates. It also launched the Digital Treasury Bond Platform (DIGIT) initiative, allowing institutions to issue government bonds via blockchain. At London Digital Asset Week, UK Economic Secretary to the Treasury Lucy Rigby announced the creation of a "Digital Markets Pioneer" position, appointed by the government from an industry leader, to coordinate efforts among institutions such as the Bank of England, the Treasury, and the Financial Conduct Authority (FCA) to promote blockchain-based financial markets and asset tokenization. Industry insiders believe this role will be a crucial catalyst for reaching consensus between regulators and market participants and accelerating innovation. Some analysts point out that compared to the EU, which has already introduced the Markets in Crypto-Assets (MiCA) Directive, the UK still needs to quickly clarify the regulatory status of new asset classes such as stablecoins. David Geale, Executive Director of the UK FCA, said: "Since we restricted retail investors from trading crypto-asset instruments, the market has matured. We have provided consumers with more choice while ensuring the necessary safeguards are in place."
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