British financial watchdog the Financial Conduct Authority (FCA) has said it “will not object” to applications for cryptocurrency-backed exchange-traded notes (ETNs).
Unlike the spot-bitcoin exchange-traded funds (ETFs) that have caused a major buzz in the US, these ETNs are derivative products that will not hold bitcoin and other crypto assets directly.
ETNs have been available in the US and the European Union for several years, but the FCA imposed a ban on them in January 2020.
This ban will remain for retail investors, with only authorised and professional investors such as regulated investment firms and credit institutions getting the go-ahead to trade cryptocurrency ETNs.
“The FCA continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose,” read the FCA’s statement. “As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place.”
Exchanges “will need to continue to make sure sufficient controls are in place, so trading is orderly and proper protection is afforded to professional investors”, said the FCA, adding that “cETNs must meet all the requirements of the UK Listing Regime, for example on prospectuses and on-going disclosure”.
The news comes amid a strong crypto rally, with bitcoin hitting a new record high on Monday, bringing year-to-date gains above 60%.