The UK’s Financial Conduct Authority slammed the door on retail crypto investors in 2021, banning them from buying crypto ETNs and derivatives. While professional investors can still access around 30 crypto ETPs on the London Stock Exchange after passing a proficiency test, regular folks are left out in the cold. The FCA’s reasoning? Protecting consumers from themselves, basically. The regulator’s recent proposals aim to ensure consumer awareness of risks through strict financial promotion rules.
Retail crypto investors got locked out by the FCA in 2021, while professionals still play the game after proving their worth.
Sure, the regulator had some valid concerns. Crypto markets are volatile. ETNs carry counterparty risks. And yes, some sketchy marketing tactics were pushing these products. But here’s the kicker – the ban might be doing more harm than good. UK retail investors haven’t given up on crypto; they’ve just moved to unregulated or offshore venues. Talk about backfiring. While zero-knowledge proofs enable secure transaction verification without exposing sensitive data, UK investors can’t benefit from these protective measures in regulated markets.
Meanwhile, across the Channel, European countries are eating the UK’s lunch. Switzerland and Germany welcome retail crypto ETPs with open arms, attracting fintech innovation and talent. The UK, once proud of its fintech leadership, is watching from the sidelines. Some protector the FCA turned out to be.
The good news? The regulator might finally be getting the message. In June 2025, they opened a consultation about lifting the ban. Better late than never. The proposed changes would allow retail access to crypto ETPs listed on recognized exchanges like the LSE, with proper safeguards in place. The derivatives ban would stick around though – baby steps, apparently. With Bitcoin reaching $104,000 this year, the pressure to act has intensified.
Critics call the ban paternalistic, and they’ve got a point. It’s pretty rich telling adults they can’t invest in something after reading risk disclosures. The policy has effectively pushed innovation abroad and complicated the UK’s ambitious fintech plans. Capital market providers rarely include digital assets in mainstream UK portfolios anymore – it’s just too much hassle.
At least the FCA is finally admitting that competitiveness matters. September could bring changes, assuming they don’t get cold feet. For now, though, the UK’s crypto ETP market remains stuck in second gear while continental rivals zoom ahead.
