The British FCA has fully lifted the "cryptocurrency ETN ban", is it expected to unlock US$930 billion in buying orders?

The UK Financial Conduct Authority (FCA) has officially lifted its multi-year ban on cryptocurrency exchange-traded notes (ETNs) on October 8, paving the way for Bitcoin and other digital assets to further integrate into the mainstream financial market.
(Preliminary summary: The Bank of England’s plan to “limit stablecoin holdings” has caused public outrage: It will not work at all and will only lag behind the global encryption competition)
(Background supplement: Financial Times: The United Kingdom plans to fully regulate cryptocurrency in 2026, relax some principles, and strengthen targeted supervision)

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The British Financial Conduct Authority (FCA) has already announced on October 8 Japan officially lifted its multi-year ban on cryptocurrency exchange-traded notes (ETNs), paving the way for Bitcoin and other digital assets to further integrate into mainstream financial markets.

What are cryptocurrency ETNs?

Cryptocurrency ETNs (Exchange-Traded Notes) are debt instruments that allow investors to invest indirectly in an underlying asset (such as Bitcoin) without directly holding the asset. Unlike exchange-traded funds (ETFs), ETNs do not hold real assets but are issued as unsecured debt, similar to bonds, that track the price performance of the underlying asset. This financial product provides investors with a convenient way to participate in the cryptocurrency market while trading on regulated exchanges.

However, the UK imposed a ban on cryptocurrency ETNs in January 2021, prohibiting exchanges and financial institutions from promoting or distributing such products to retail investors. The FCA's rationale at the time was that the high volatility and uncertainty in the cryptocurrency market could pose a risk to investors and therefore took this protective measure to limit retail investor participation.

The lifting of the ban by the FCA means that retail investors in the UK can finally enter the cryptocurrency ETN market like institutional investors. This move not only marks a change in the UK's attitude towards digital asset regulation, but also reflects the global trend of gradually relaxing regulations on cryptocurrency.

It is worth mentioning that in March 2024, the FCA had allowed the London Stock Exchange to list Bitcoin ETNs for institutional investors, and now extends this opportunity to retail investors, showing the UK's growing confidence in the cryptocurrency market.

Retail investors still have to wait

However, although the ban has officially been lifted, retail investors are still unable to purchase cryptocurrency ETNs immediately. Investors will have to wait until October 13 to officially enter the market. The reason for the delay is that the FCA only started accepting submissions from issuers for cryptocurrency ETN prospectuses on September 25, just two weeks before the official launch.

Potential to unlock $930 billion in potential

More importantly, lifting the ban could bring huge inflows to the cryptocurrency market. According to Forbes, data released by the British government in 2023 showed that British individual savings accounts (ISAs) and self-managed personal pension (SIPP) accounts held a total of more than $930 billion in assets. Holders of these accounts are not taxed on investment gains, but the choice of products in which they can invest is limited.

If regulatory authorities approve the inclusion of Bitcoin and Ethereum ETNs as investment options in these accounts, it may bring huge buying into the cryptocurrency market due to tax benefits.