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FCA updates position on crypto Exchange Traded Notes

The FCA has stated it will not oppose requests from Recognised Investment Exchanges (RIEs) to create a cryptoasset-backed Exchange Traded Notes (cETNs) UK listed market segment.

The cETNs will be available only to professional investors authorised or regulated to operate in financial markets, such as investment firms and credit institutions. The exchanges will need to ensure they have in place safeguards to prevent access by retail consumers, given the FCA’s ban on the sale of cETNs and crypto-derivatives to the retail market.  cETNs must also meet all UK Listing Regime requirements, for example on prospectuses and on-going disclosure.

The FCA maintains its view that cETNs and crypto-derivatives are not suitable for retail consumers, but that as a result of an increase in data due to a longer period of trading history,  professional investors should now be in a position to sufficiently establish whether cETNs meet their risk appetite.

The FCA says it will consider applications for listing cETNs on a case by case basis.

Harry Wells