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UK Financial Watchdog Eases Path for Crypto ETNs, Keeping Retail Investors on the Sidelines

The cryptocurrency sector has reacted positively to the UK’s Financial Conduct Authority (FCA) announcement on March 11, stating it will simplify the process for listing crypto investment products, specifically crypto exchange-traded notes (ETNs), for professional investors.

However, retail investors are still excluded from participating, reflecting a cautious stance towards broader crypto market accessibility.

Europe’s regulatory framework does not support exchange-traded funds (ETFs) for single assets like Bitcoin or Ether, positioning ETNs as the preferred exchange-traded product (ETP) in both the EU and the UK.

This recent development is seen as a step towards integrating cryptocurrency into the regulated financial market, potentially closing the gap between traditional finance and the burgeoning crypto sector.

Natalia Latka of Merkle Science highlighted the significance of this move, emphasizing its potential to foster cryptocurrency’s integration into a regulated framework.

Yet, she pointed out the ongoing exclusion of retail investors, underlining the UK’s cautious approach towards embracing crypto assets among the general public.

George McDonaugh of KR1 praised the FCA’s decision but called for further action to make the market more inclusive.

He advocated for expanding the UK’s listing regime to allow more companies access to the London Stock Exchange’s Main Market and its junior market, aiming to bolster the UK’s position as a global crypto hub.

The cautious approach of the FCA, established on October 6, 2020, reflects concerns over the valuation of crypto assets, the risk of market abuse, financial crime, and the volatility of crypto asset prices.

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Despite these reservations, the cryptocurrency market has seen significant growth, prompting discussions about revisiting regulations, especially concerning retail investors.

CryptoUK, a trade association, has voiced support for regulatory changes that provide a balanced field for all types of innovation while advocating for the reconsideration of bans on retail investor access to crypto investments.

The statement stresses the importance of proportionate regulation and investor protection without disproportionately limiting access to crypto assets.

The FCA’s current stance and the industry’s reaction underscore the ongoing dialogue between regulatory bodies and the crypto sector.

The hope is for a regulatory environment that both protects investors and supports innovation, contributing to the UK’s ambition to become a leading global hub for crypto asset technology.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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