The United Kingdom (UK) is getting on the list of one of the major global markets that are opposed to approving retail access to crypto linked exchange-traded products (ETPs). This approach comes in when countries like Continental Europe, Australia, Brazil, Canada, and the US have embraced crypto ETPs. The US Securities and Exchange Commission (SEC) recently approved the launch of spot BTC ETFs.
UK and it’s anti crypto rules
The UK still maintains a ban on the sale of crypto linked derivatives to retail investors. The UK’s top authorities stance has garnered attention amid the recent launch of 11 spot bitcoin ETFs on Wall Street. This development has allowed the biggies like BlackRock, Grayscale, Invesco, and Fidelity to enter the crypto market.
The Financial Conduct Authority (FCA) in the UK implemented a ban in 2021 on crypto linked assets. This includes prohibiting the sale of crypto related derivatives, including exchange-traded products, to retail investors. The ban comes well before Prime Minister Rishi Sunak supports the UK as a crypto hub, but regulatory restrictions persist.
According to reports, the ban was mainly influenced by issues around leveraged products. The ban was imposed to protect the UK’s retail investors from the risk involved with leveraged crypto products.
It is important to note that the Bitcoin price had dropped by 21% after the initial two weeks of the launching spot BTC ETF in the US. However, Bitcoin price rebounded after a brief fall from $48k to $38k in just 12 days.
Bitcoin is trading at an average price of $42,330, at the press time. Its 24 hour trading volume is up by 7% to stand at $15 billion.
Demand for digital asset derivatives
Industry figures seem to be divided on the FCA’s regulatory approach. Some players are arguing that retail investors can invest in crypto directly through crypto exchanges without regulatory oversight. While others believe regulated products offer a safer investment avenue.
This has left the UK retail investors with the ban in the country seeking exposure to crypto assets. Calls for a reassessment of the FCA’s position have grown following the mainstream acceptance of crypto through recent US ETF launches.
After bagging approval in the US, now a noticeable demand for crypto ETPs among UK retail investors. Some investors reportedly expressed their interest in ETPs as a regulated investment option. They are being compared to purchasing digital tokens directly.
Despite the ban, calls for reconsideration have intensified, with industry participants emphasizing that crypto ETPs are not more complex than existing financial products like inverse or leveraged products.
