The Financial Conduct Authority (FCA) announces its willingness to consider requests from Recognised Investment Exchanges (RIEs) to establish a UK listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs) tailored exclusively for professional investors.

In ensuring the orderly trading and protection of professional investors, exchanges must maintain robust controls. cETNs are required to adhere to all stipulations of the UK Listing Regime, including provisions on prospectuses and ongoing disclosure.

Backed by a more extensive trading history, the FCA believes exchanges and professional investors are now better equipped to assess whether cETNs align with their risk tolerance.

While acknowledging the unsuitability of cETNs and crypto derivatives for retail consumers due to associated risks, the FCA upholds the ban on their sale to retail consumers.

Reiterating the high-risk and largely unregulated nature of cryptoassets, the FCA advises investors to be prepared for the possibility of losing all invested funds.

Collaborating with governmental bodies, international partners, and industry stakeholders, the FCA aims to refine the UK’s regulatory framework for cryptoassets, setting global benchmarks in this domain.

Additional Information:

• The FCA will evaluate applications for listing cETNs on the Official List on a case-by-case basis following the creation of a new UK listed market segment by an RIE.
• Applications for listing cETNs on UK RIEs for professional-only market segments will be considered by the FCA.
• Exchanges must implement stringent safeguards to restrict access to the market segment to professional investors exclusively, ensuring thorough comprehension of associated risks.
• Professional investors, including investment firms and credit institutions, must be authorised or regulated to operate in financial markets.
• The ban on offering or selling crypto derivatives and ETNs referencing specific cryptoassets to UK retail consumers remains in effect.
• The FCA remains committed to reviewing its stance on cETNs, aligning with legal obligations and concerns highlighted in the CATF report.
• Continuing to collaborate with the government, the FCA seeks to enhance regulatory measures for cryptoassets in the UK.
• From October 16, 2023, crypto firms targeting UK consumers must adhere to updated financial promotion rules, akin to those governing high-risk investments.
• Leveraging existing powers, the FCA strives to prevent financial crime, combat misleading crypto marketing, and educate the public about crypto-related risks and scams.