The UK’s
market regulator will now permit certain authorized exchanges in the UK to
create special market segments where specific types of investment crypto products
can be bought and sold. However, these market segments will only be accessible
to professional investors, such as investment firms and banks that are licensed
to operate in financial markets.
The
Financial Conduct Authority (FCA) has updated its position on
cryptoasset-backed Exchange Traded Notes (cETNs) for professional investors, allowing
Recognised Investment Exchanges (RIEs) to establish dedicated UK-listed market
segments for these products.
RIEs will
be required to ensure that adequate controls are in place to maintain orderly
trading and provide proper protection for professional investors. Additionally,
cETNs must comply with all requirements of the UK Listing Regime, including a prospectus
and ongoing disclosure obligations .
The FCA’s
decision is based on the belief that exchanges and professional investors
should now be better equipped to assess whether cETNs align with their risk
appetite, given the increased insight and data available due to a longer period
of trading history.
The move
comes a week after the FCA approved Portofino Technologies to offer crypto
services in the UK. The Switzerland-based market-making liquidity provider will
now be able to engage with major banks and trading platforms interested in the
crypto market.
Retailers Cannot Use cETNs
However,
the ban on the sale of cETNs and crypto derivatives to retail consumers remains
in effect, as the FCA continues to consider these products unsuitable for
retail consumers due to the potential harm they pose.
The FCA
believes that professional investors are better equipped to understand and
manage the risks associated with these products, given their experience and
resources.
“cETNs
and crypto derivatives are ill-suited for retail consumers due to the harm they
pose,” the regulator commented in a press release. “As a result, the
ban on the sale of cETNs (and crypto derivatives) to retail consumers remains
in place.”
The FCA emphasizes that cryptoassets are high-risk and largely unregulated, and
those who invest should be prepared to lose all their money.
FCA
Regulates and Intensifies Efforts against Financial Fraud
In
February, the UK’s FCA disclosed its annual
report on fraud and financial crime, underscoring the regulator’s dedication to
combating scams that target consumers. The FCA achieved a new milestone in 2023
by issuing 2,286 scam alerts through its public Warning List, an increase of 21% compared to the 1,882 warnings released in 2022.
Additionally, from January to
October 2023, the FCA withdrew the licenses of 1,266 companies for failing to
meet its authorization standards, doubling the number from the previous year.
Companies that do not adhere to these criteria are prohibited from operating in
the regulated financial sector.
The UK’s
market regulator will now permit certain authorized exchanges in the UK to
create special market segments where specific types of investment crypto products
can be bought and sold. However, these market segments will only be accessible
to professional investors, such as investment firms and banks that are licensed
to operate in financial markets.
The
Financial Conduct Authority (FCA) has updated its position on
cryptoasset-backed Exchange Traded Notes (cETNs) for professional investors, allowing
Recognised Investment Exchanges (RIEs) to establish dedicated UK-listed market
segments for these products.
RIEs will
be required to ensure that adequate controls are in place to maintain orderly
trading and provide proper protection for professional investors. Additionally,
cETNs must comply with all requirements of the UK Listing Regime, including a prospectus
and ongoing disclosure obligations .
The FCA’s
decision is based on the belief that exchanges and professional investors
should now be better equipped to assess whether cETNs align with their risk
appetite, given the increased insight and data available due to a longer period
of trading history.
The move
comes a week after the FCA approved Portofino Technologies to offer crypto
services in the UK. The Switzerland-based market-making liquidity provider will
now be able to engage with major banks and trading platforms interested in the
crypto market.
Retailers Cannot Use cETNs
However,
the ban on the sale of cETNs and crypto derivatives to retail consumers remains
in effect, as the FCA continues to consider these products unsuitable for
retail consumers due to the potential harm they pose.
The FCA
believes that professional investors are better equipped to understand and
manage the risks associated with these products, given their experience and
resources.
“cETNs
and crypto derivatives are ill-suited for retail consumers due to the harm they
pose,” the regulator commented in a press release. “As a result, the
ban on the sale of cETNs (and crypto derivatives) to retail consumers remains
in place.”
The FCA emphasizes that cryptoassets are high-risk and largely unregulated, and
those who invest should be prepared to lose all their money.
FCA
Regulates and Intensifies Efforts against Financial Fraud
In
February, the UK’s FCA disclosed its annual
report on fraud and financial crime, underscoring the regulator’s dedication to
combating scams that target consumers. The FCA achieved a new milestone in 2023
by issuing 2,286 scam alerts through its public Warning List, an increase of 21% compared to the 1,882 warnings released in 2022.
Additionally, from January to
October 2023, the FCA withdrew the licenses of 1,266 companies for failing to
meet its authorization standards, doubling the number from the previous year.
Companies that do not adhere to these criteria are prohibited from operating in
the regulated financial sector.
