The FCA plans to lift its four year ban on offering high-risk crypto exchange traded notes (cETNs) to retail investors.
It said similar products are already available in other countries.
The FCA banned the sale, marketing and distribution of derivatives and ETNs that reference unregulated transferable cryptoassets to retail clients In January 2021.
At the time it said that the products were “ill-suited for retail consumers due to the harm they pose.”
It warned that “retail consumers might suffer harm from sudden and unexpected losses if they invest in these products.”
It had first announced its intention to ban the sale of some crypto-asset products to retail investors in 2019.
Lifting the ban would mean cETNs could be sold to individual consumers, rather than just professional investors, in the UK, if they’re traded on an FCA-approved investment exchange (a Recognised Investment Exchange or RIE).
The regulator said financial promotion rules would apply so consumers get information on the risks and would not be offered inappropriate incentives to invest, in the same way as if they bought cryptoassets directly.
The FCA said its u-turn was part of aim to support UK growth and competitiveness.
David Geale, executive director of payments and digital assets at the FCA said: “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry.
“We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them given they could lose all their money.”
It is the latest development in the FCA’s continuing attempt to establish a regulatory framework for crypto.
The regulator has outlined its crypto roadmap and recently published proposals on stablecoins as well as other aspects of the regime.
The FCA’s ban on retail access to cryptoasset derivatives will remain in place, it said. It added it will continue to monitor market developments and consider its approach to high-risk investments.
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