Professional investors, such as investment firms and credit institutions authorized or regulated to operate exclusively in the financial markets, would have access to these products.

Exchanges will need to keep ensuring that enough controls are in place to ensure that professional investors are properly protected and that trading is conducted in an orderly manner. The UK Listing Regime's criteria, including those regarding prospectuses and ongoing disclosure, must be met by cETNs.

As a result of a longer trading history, the FCA believes that exchanges and professional investors should now have more information and data to help them determine whether or not cETNs suit their risk tolerance.

Because of the risks they present, the FCA still thinks that cETNs and cryptocurrency derivatives are not appropriate for retail customers. The sale of cETNs (and cryptocurrency derivatives) to retail customers is thus still prohibited.

People are still being reminded by the FCA that cryptoassets are extremely risky and mostly unregulated. Those who invest ought to be ready to lose everything they have.

In order to establish worldwide norms in this area and create the UK's cryptoasset regulatory framework, the FCA is working with the government, foreign partners, and business.
Additional details

The FCA will evaluate applications for listing cETNs on the Official List on a case-by-case basis if a RIE establishes a new market segment that is listed in the UK.

Applications for cETNs to be listed on the UK RIEs for market sectors exclusive to professionals will be reviewed. Setting up the professional-only market segments is the responsibility of the RIEs.

When there is a regulated market for the cETN, the FCA will evaluate listing applications according to the standards outlined in the Listing Rules. UK trading venues are required by RIE Recognition Requirements 2.6.1 to ensure that adequate controls are in place to guarantee that trade is carried out in an orderly manner and to provide investors with appropriate protection.

Exchanges must have the necessary security measures in place to guarantee that only professional investors may access the market sector. Exchanges must also ensure that they are confident that their admission to trading criteria and trading controls will sufficiently minimize the risks associated with trading crypto-linked assets, and that they fully understand the nature of those risks.

Companies like credit unions or investment firms that need to be licensed or regulated to do business in the financial markets are considered professional investors. Another name for them is "professional clients."

The FCA prohibited UK companies from providing or selling ETNs and crypto derivatives that make reference to specific categories of cryptoassets to retail customers in the UK as of January 2020. This is still in effect and will be applicable to any cETNs that are permitted to trade under the FCA's conduct of business sourcebook (COBS) regulations.

This ban helps us achieve our goals of safeguarding and improving the integrity of the UK financial system as well as providing consumers with an adequate level of protection.

In keeping with our legal responsibilities, the FCA has already stated that it will continue to evaluate its position on cETNs, taking note of the issues raised in the CATF study.

The government and the FCA are still collaborating to define the UK's strategy for regulating cryptoassets. The FCA's Discussion Paper on Stablecoins is no longer open for comments. As of October 8, 2023, cryptocurrency companies that want to advertise to UK customers must abide by the new financial promotion regulations. These regulations are in line with those that apply to high-risk investments now.

Despite the limited regulation of cryptocurrencies in the UK, we have made use of our authority to shut down companies that don't adhere to the basic requirements for stopping financial crime. Assist UK customers in defending themselves against deceptive or unfair cryptocurrency marketing, and alert them to frauds and the dangers associated with cryptocurrency investing.