In a partial victory for UK crypto adoption, there has been a relaxation of regulations regarding cryptocurrency exchange-traded products (ETPs), and a wave of such products is poised to hit the London market.
However, despite this development, industry leaders have pushed back at the Financial Conduct Authority (FCA) for maintaining restrictions that limit access to these ETPs solely to “professional investors,” while upholding a ban on retail investors purchasing crypto ETPs.
This means that the GCA would not oppose requests from exchanges like the London Stock Exchange to list unleveraged crypto-backed exchange-traded notes linked to cryptocurrencies like Bitcoin or Ethereum, but these products would only be accessible to institutional entities such as investment firms, credit institutions, pension funds, and insurance companies.
This decision places the UK somewhat in line with other jurisdictions like continental Europe, Australia, Brazil, Canada, and the US, which have already embraced crypto ETPs to varying extents. Notably, US Bitcoin exchange-traded funds (ETFs) have collectively amassed a staggering $31 billion in assets since their launch in January.
Speaking with Cointelegraph, George McDonaugh, co-founder and co-managing director of KR1, a European digital asset investment company said: “We would like more to be done around the U.K.’s listing regime.”
“Allowing more companies to join the Main Market of the London Stock Exchange and its junior market, for the U.K. government, other policymakers and the industry to achieve its ambition of becoming a truly global hub for the crypto industry.”
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Despite these concerns, there remains optimism about the UK’s potential to become a global leader in fintech and digital assets.
“If UK regulations permitted retail investors to invest in crypto ETPs via regulated markets this would bring the UK in line with much of Europe and allow those retail investors to take advantage of the built-in security that established exchanges provide,” said Tim Bevan, chief executive of ETC Group speaking with the Financial Times.
“It would also help advance the claim of the UK to be a global leader in fintech.”
What Bevan is referring to, is Prime Minister Rishi Sunak’s claim that it was his “ambition to make the UK a global hub for crypto asset technology.”
Since then, the UK’s financial watchdog has been extremely cautious in the crypto sphere. And there exists a dichotomy between a government who wants to establish itself as a global crypto hub, and a regulator who wants to be more risk averse.
As such, the debate surrounding the accessibility of crypto ETPs to retail investors is likely to remain a focal point for industry stakeholders and policymakers alike.
