UK Regulator Eases Crypto Listing Rules but Excludes Retail Investors
Summary:
The UK's Financial Conduct Authority (FCA) has eased restrictions for listing crypto investment products, permitting approved investment exchanges to list crypto exchange-traded notes (ETNs) for professional investors. Despite this progress, the exclusion of retail investors remains a concern. The decision marks an important step in integrating crypto-related products into a regulated environment and bridging the gap between crypto and traditional finance. This cautious approach to embrace the burgeoning interest in cryptocurrencies could serve as a roadmap for the nation's goal to become a global hub for crypto-asset technology.
Cryptocurrency insiders are greeting the United Kingdom’s main fiscal regulator’s announcement to ease the listing of crypto investment goods with open arms. On March 11, the Financial Conduct Authority (FCA) stated it will permit experienced investors to deal in crypto exchange-traded notes (ETNs) presented by known investment exchanges (RIEs). Nonetheless, restrictions denying retail investor involvement persist, marking the FCA’s revelation as a limited win for the broader acceptance of crypto.
European regulatory frameworks disallow presenting an exchange-traded fund (ETF) for a singular asset, like Bitcoin or Ether, leaving ETNs as the preferred exchange-traded product (ETP) in Europe and the U.K, whose financial regulations maintain overall alignment despite Brexit. Given the FCA’s approval, traditional finance and U.K. traders might soon have simpler accessibility to crypto-related fiscal products.
However, approval does come with conditions. Natalia Latka, policy director at blockchain analytics company Merkle Science, told Cointelegraph that approval for recognized investment exchanges to list crypto ETNs is a positive development. Although there are limitations, this decision encourages the inclusion of cryptocurrency-related products into regulated settings and bridges the gap between the crypto industry and traditional finance world.
Yet Latka particularly highlighted the denial of retail investors, stating the U.K.'s approach suggests hesitation in acknowledging the rapidly increasing interest in crypto assets from retail investors. Cryptocurrency insiders generally agree that if the U.K. is serious about fulfilling its ambitions of becoming a crypto hub, it must expedite the expansion of involvement.
U.K. Prime Minister Rishi Sunak has made public his plan to prioritize financial technology in the country, with intentions to implement extensive financial services reforms. Sunak stated in April 2022 that his ambition is to make the U.K. a global hub for crypto asset technology.
Despite these ambitions, progress has been slow due to the FCA’s cautious approach to the industry. Considering these circumstances, even a small step forward can feel like a significant victory. And yet, the FCA has kept its cautious stance towards crypto, starting from October 6, 2020. Its reasons include the inherent nature of the associated assets, market abuse, and financial crime, extreme volatility in the price movements of crypto assets, inadequate knowledge about crypto assets from retail consumers, and lack of legitimate investment need for retail consumers in such products.
Ever since approval for spot Bitcoin ETFs came in the United States, owing to substantial industry, legal, and political pressure, hopes for a similar scenario in the U.K. have risen, even though more needs to be done for broader accessibility. Even held back by good intentions, the FCA's position could harm those it's meant to protect. According to industry insiders, the FCA's policy seems to be a work in progress, which hopefully signifies an eventual shift to crypto acceptance.
Published At
3/15/2024 2:43:50 PM
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