This initiative aims to cater specifically to professional investors, including authorised or regulated investment firms and credit institutions operating in financial markets. The FCA emphasises the importance for exchanges to maintain robust controls to ensure orderly trading and adequate protection for professional investors. cETNs seeking listing must comply with all requirements of the UK Listing Regime, such as those concerning prospectuses and ongoing disclosure.
Based on extended trading history insights and data, the FCA suggests that exchanges and professional investors are better equipped to assess whether cETNs align with their risk tolerance. However, the FCA reiterates its view that cETNs and crypto derivatives are not suitable for retail consumers due to associated risks. Consequently, the ban on selling cETNs (and crypto derivatives) to retail consumers remains in effect.
Highlighting the high-risk and largely unregulated nature of cryptoassets, the FCA advises investors to be prepared for the possibility of losing their entire investment. The FCA is actively collaborating with government, international partners, and industry stakeholders to develop the UK's regulatory framework for cryptoassets, aiming to set international standards in this domain.
Regarding the establishment of a new UK-listed market segment by Recognised Investment Exchanges, the FCA will assess applications for listing cETNs on a case-by-case basis. RIEs are responsible for implementing professional-only market segments, with exchanges required to ensure access solely for professional investors and adequately mitigate associated risks.
Professional investors, defined as authorised or regulated firms operating in financial markets, are the primary target for cETN listings. The FCA's ban on UK firms offering or selling crypto derivatives and ETNs referencing certain crypto assets to retail consumers, introduced in January 2020, remains in place to protect consumers and uphold the integrity of the UK financial system according to the FCA.
The Financial Conduct Authority is a financial regulatory body in the United Kingdom which operates independently of the UK Government and is financed by charging fees to members of the financial services industry. The FCA commits to reviewing its position on cETNs, considering concerns raised in the CATF report in line with its legal obligations and ongoing collaboration with the government on crypto asset regulation.
While crypto regulation in the UK is currently limited, the FCA leverages its existing powers to prevent firms from failing to meet minimum anti-financial crime standards, protect consumers from misleading crypto marketing, and raise awareness about crypto scams and associated risks.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now