The City watchdog is set to lift a ban on some cryptocurrency-linked investments for individual consumers despite warning people could “lose all their money” from the “high-risk” asset.
The Financial Conduct Authority (FCA) said it was proposing to allow retail investors to access crypto exchange-traded notes (ETNs).
Like stocks and shares, crypto ETNs can be bought and sold and work by tracking the performance of cryptoassets such as Bitcoin and Ethereum.
It means people are exposed to its changing value without needing to hold the asset themselves.
Currently, just professional investors are allowed to buy and sell the investment product after the FCA granted access last year.
At the time, the regulator said it still believed crypto ETNs to be “ill-suited for retail consumers due to the harm they pose”.
On Friday, David Geale, the FCA’s executive director of payments and digital assets, said the proposals reflect its “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.”
Access to crypto derivatives would still be banned for retail investors – but the FCA said it would continue to consider its approach to high-risk investments.
In April, Chancellor Rachel Reeves said she wanted the UK to be a “world leader in digital assets” and announced plans to make crypto firms subject to regulation in the same way as traditional finance companies.
“While the UK will always be committed to high international standards, I am determined that our regulatory framework supports economic growth,” she said at the time.
But the FCA’s chairman Nikhil Rathi recently warned that the number of young people turning to crypto as their first taste of investment was “not great”, adding that it was “very high risk and you could potentially lose all your money”.
The price of Bitcoin hit a fresh all-time high last month, topping about 111,000 dollars (£82,000) as the crypto market rallies amid support from Donald Trump’s administration in the US.
