UK retail investors are facing unexpected delays in accessing newly regulated crypto products, leaving many frustrated as they aim to capitalize on the recent surge in digital token prices. The Financial Conduct Authority (FCA), the nation’s financial regulator, announced in August that it would be lifting its ban on cryptocurrency exchange-traded products (ETPs) for retail investors, effective next Wednesday. However, insiders now suggest that investors might need to wait nearly an additional week before these products, linked to cryptocurrencies like bitcoin and ether, can be purchased.
This delay, while expected to be short, has ignited resentment within the crypto industry, with many executives placing the blame firmly on the regulator. A source noted the illogicality of the situation: “It doesn’t seem logical that the ban’s lifted and retail won’t be able to purchase on the same day.” Another senior industry figure commented on the FCA’s last-minute preparations, emphasizing a sense of urgency: “There’s been plenty of time to prepare.”
To introduce crypto ETPs, companies must submit product prospectuses to the FCA for review. However, the FCA only began approving these documents last Thursday, two weeks prior to the anticipated launch. The introduction of regulated products has been eagerly awaited by UK retail investors, who feel they have been sidelined as U.S. counterparts have poured billions into similar market offerings. Bitcoin, which recently soared to $120,000—doubling in value since October—has been propelled in part by notable endorsements, including support from Donald Trump, spurring a rush into cryptocurrencies.
Exchange-traded notes (ETNs), which track underlying indexes and are traded on exchanges, essentially operate like exchange-traded funds but with a specific focus on cryptocurrencies in this context. The FCA has historically adopted a cautious stance toward crypto investments, primarily to protect investors from the volatility and potential fraud associated with the sector. Following a protracted process, March 2024 saw the FCA finally approve crypto ETNs for listing on the London Stock Exchange (LSE), though initially limiting access to institutional investors only.
The current delays are attributed, according to sources, to ongoing discussions between the FCA and the LSE regarding the appropriate segments for these products aimed at retail investors. Insiders reported that the two entities are engaging in deliberations, which has caused further delays in launching the sought-after products. The FCA explained that it had been awaiting the establishment of a relevant segment on the LSE before it could begin to review the companies’ prospectuses, noting that they only commenced this process two days after the segment opened.
By lifting the ban, the FCA argued, it empowers investors to make informed decisions regarding high-risk investments. However, the review process for each product prospectus will take several days, with potential for additional commentary requests from the FCA, pushing launch timelines to at least October 13. Once the FCA approves the products, the LSE must follow suit by permitting their listing.
In the meantime, with no access to regulated crypto ETPs, some retail investors have turned to crypto-treasury companies listed in London. Yet, these asset prices have experienced significant declines in recent weeks, leaving many in a precarious financial position as they await clearer opportunities in the crypto market.
