The FCA has said it will not object to requests from Recognised Investment Exchanges (RIEs) to create a UK listed market segment for cryptoasset-backed exchange traded notes (cETNs).

These products would be available for professional investors, such as investment firms and credit institutions authorised or regulated to operate in financial markets only.

The FCA said it “continues to believe cETNs and crypto derivatives are ill-suited for retail consumers due to the harm they pose. As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place”. 

“If UK regulations permitted retail investors to invest in crypto ETPs, via regulated markets, this would bring the UK in line with much of Europe and allow those retail investors to take advantage of the built-in security that established exchanges provide.”

Tim Bevan, CEO, ETC Group

“Whilst we welcome the FCA allowing LSE to set up a new segment for crypto exchange traded products ETPs, it is disappointing that retail investors are still precluded from participation in securities traded on regulated markets issued through an authorised prospectus when no such restriction applies to opening a direct crypto account,” Tim Bevan, CEO of ETC Group, commented.

An ETN tracks an index, and the returns it pays out are based on the performance of that index, but it does not own the underlying asset. ETPs include ETNs.

“If UK regulations permitted retail investors to invest in crypto ETPs, via regulated markets, this would bring the UK in line with much of Europe and allow those retail investors to take advantage of the built-in security that established exchanges provide. It would also help advance the claim of the UK to be a global leader in fintech.”

The FCA says it is collaborating with government, international partners and industry to develop the UK’s cryptoasset regulatory regime and lead international standards in this space.

$1 billion spot bitcoin ETF inflow

Inflows to spot bitcoin ETFs surpassed $1 billion in one day, and now account for over 90% of the daily trading volume for ETFs offering bitcoin exposure. Bitcoin futures ETFs account for the remaining 10%.

Meanwhile, Blackrock’s IBIT product, which crossed 200,000 bitcoin in assets under management earlier in the week, saw a record inflow of 14,706 bitcoin.

The price of bitcoin also rose further amid its upwards trajectory, after data from the Consumer Price Index (CPI) predicted a fall in interest rates.

“BTC – and ethereum too – have gained too much institutional momentum to be significantly impacted by fleeting monetary policy news, whether they be CPI reports, the US Producer Price Index, also out this week, or Gary Gensler’s latest slew of fear-mongering remarks,” said Lucas Kiely, Chief Investment Officer, Yield App.

EU cohesive action on asset freezing

MEPs have approved new rules to harmonize the enforcement of EU sanctions across member states.

This includes the freezing of assets, including cryptoassets, travel bans, arms embargoes, and restrictions on business sectors. 

“The Russian invasion benefits from crooks breaking the law in Europe. They must be caught, and forum-shopping must stop,” said MEP Sophia Veld.

“We need this legislation because diverging national approaches have created weaknesses and loopholes, and it will allow for frozen assets to be confiscated. Parliament took an ambitious, harmonising approach to the law, and even though we could not close all the loopholes we wanted to, it is an improvement on the current situation and shows our strong support to Ukraine.”

The EU has adopted more than 40 sanctions regimes against third parties as part of its Common Foreign and Security Policy, most recently against Russia following its invasion of Ukraine.

This law still needs to be formally approved by the European Council.