UK greenlights cryptoasset-backed Exchange Traded Notes for professional investors

The Financial Conduct Authority (FCA) has announced that it will allow Recognised Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs). This segment would be exclusively available to professional investors, such as investment firms and credit institutions authorized or regulated to operate in financial markets.

With a longer trading history and increased data, the FCA believes that exchanges and professional investors will be better equipped to assess the risk associated with cETNs. The FCA will consider applications from RIEs on a case-by-case basis for listing cETNs.

Exchanges must have appropriate safeguards in place to ensure that the market segment is only accessible to professional investors and must fully understand the risks associated with admitting crypto-linked instruments to trading.

The FCA reminds individuals that cryptoassets are high-risk and largely unregulated, and advises them to be prepared for potential losses. The FCA is actively collaborating with the government, international partners, and industry to develop the UK’s cryptoasset regulatory framework and lead international standards in this domain.