UK Regulator Unlocks New Crypto Product but Only for Pros

UK Regulatory Body Allows Exclusive Access to Special Crypto Market Segments for Professionals

The Financial Conduct Authority (FCA), the market regulator in the UK, has given the green light for authorized exchanges to create dedicated market segments for certain types of investment crypto products. However, these segments will only be accessible to professional investors, including licensed investment firms and banks operating in the financial markets.

The FCA’s decision applies specifically to cryptoasset-backed Exchange Traded Notes (cETNs) and aims to provide more opportunities for professional investors to engage in the crypto market. To ensure orderly trading and protect professional investors, Recognised Investment Exchanges (RIEs) will be required to implement appropriate controls and meet the UK Listing Regime’s requirements, such as maintaining a prospectus and fulfilling ongoing disclosure obligations.

While professional investors are now deemed capable of assessing the suitability of cETNs based on their risk appetite and available trading history, the FCA maintains its ban on selling cETNs and crypto derivatives to retail consumers. The regulatory body continues to view these products as potentially harmful to retail consumers and believes that professional investors, due to their experience and resources, are better equipped to understand and manage the associated risks.

The FCA emphasizes that cryptoassets remain highly risky and largely unregulated, cautioning that investors need to be prepared for the possibility of losing all their invested funds.