According to Blockworks, the Financial Conduct Authority (FCA) recently announced that it would not object to some bitcoin-backed securities being listed in the UK. This move is interesting, as the FCA has historically taken a tough stance on crypto asset-backed exchange-traded products (ETPs) and implemented a ban in 2021 on the sale of crypto-related derivatives, including ETPs, to retail investors. The FCA's recent statement likely reflects mounting pressure from other jurisdictions, such as the US, where the SEC has allowed spot bitcoin ETFs to be sold to both institutional and retail investors.
In Europe, most digital assets ETPs are structured as ETNs due to regulation. While bitcoin ETFs are unlikely to enter EU markets soon, similar products are being permitted for sale to professional investors. For example, EU asset manager Jacobi listed BCOIN, a bitcoin product structured as close as possible to an ETF, in Amsterdam last August.
However, the FCA's statement does not necessarily indicate a change in its stance on crypto. The FCA saying it would "not object" to bitcoin-backed securities is not the same as allowing them to be listed. Additionally, the FCA maintains that crypto derivatives are ill-suited for retail consumers, and the ban on the sale of ETNs to retail consumers remains in place.
Since the FCA's ban on the sale of crypto derivatives to retail consumers was introduced in 2020, the crypto asset ecosystem has changed dramatically. The UK government has also reiterated its commitment to making the UK a global hub for crypto assets, which seems at odds with a blanket prohibition. Given this backdrop, it makes sense for the FCA to reconsider the ban on retail clients, but the future broader regulatory regime for crypto assets remains uncertain and is likely to be a multi-year process.