Response
The World Federation of Exchanges (WFE) welcomes the FCA’s recent steps towards revisiting the regulatory approach to cryptoasset-related financial instruments, specifically the consultation on the potential repeal of the ban on crypto Exchange Traded Notes (ETNs) for retail investors.
As noted in our response to FCA DP25/1 – Regulating Cryptoasset Activities, the WFE is broadly supportive of the FCA’s intent to regulate crypto-asset activities in line with International Organization of Securities Commissions (IOSCO) recommendations. We support the development of technology-neutral and outcomes-based regulation, and the principles of ‘same risk, same regulation’. This ensures market integrity, investor protection, and a level playing field between traditional and crypto markets.
Nevertheless, we continue to find the 2020 ban on the sale of crypto-derivatives to retail investors inconsistent with these principles and with the UK Government’s evolving stance on the suitability of cryptoassets for retail consumers. Retail investors are currently precluded from accessing products listed on regulated, public, and lit markets—leaving them exposed to unregulated and potentially unsafe platforms.
We therefore recommend the following:
- Full repeal of the 2020 ban on the sale of crypto-derivatives and ETNs to retail investors. Retail participants should be allowed to access these instruments via regulated venues, which offer transparency, robust surveillance, and investor protections not available on unregulated platforms.
- Applicability to all recognised overseas investment exchanges (ROIEs). The repeal should not be limited to products listed on UK venues alone. ETNs and derivatives listed on all ROIEs—where regulatory standards are commensurate—should also be permitted, to ensure consistency, support international market access, and prevent fragmentation.
