FCA Lifts Crypto Ban: Is It Too Little, Too Late?

The FCA’s tight grip on crypto has effectively meant financial advisors have had their hands tied – and in the meantime, the crypto market has developed at pace. It’s not clear whether this has led to consumer benefit, since the FCA’s own surveys show that a substantial proportion of retail investors hold crypto.

Retail investors who have sat out of the market have watched a new asset class emerge from nothing to over $3 trillion. Those who participated directly did so without the counsel of financial advisors, who might have drawn their attention to counterparty risk and diversification.

This easing is welcome, although I do wish the regulator trusted its own rules, already gilt-edged, and the competence and professionalism of the UK’s financial advice industry, to help clients navigate their way through this new asset class, rather than freeze advisors and clients out of it.

The FCA lifting its ban on crypto ETNs feels to me less like a turning point and more like a late-stage gimmick. Retail punters are now being handed access to debt instruments tracking one of the most volatile asset classes in modern history, just as the smart money is walking out the door. Bitcoin peaked at over $65,000 in 2021, collapsed 76% the following year, and remains a speculative mess dressed up as financial innovation. Meanwhile, UK property has quietly done what it’s always done: delivered. Average residential returns since 1980 exceed 7% annually, compounded, plus rental income, tax advantages, leverage, and crucially, underlying value. You can’t live in a token or refinance an NFT. This move won’t bring market competitiveness; it just exposes naive investors to overpriced risks after the party’s already ended. Technology doesn’t replace fundamentals. Sound investment still begins and ends with land, ownership, and control not crypto IOUs on a volatility binge.

Look, I think it’s a great thing that the FCA has lifted their stance on this market, is it a little late, you could argue it might be however I think with the volatile nature in crypto since 2021, I think they’ve taken a cautious stance to protect UK consumers and to protect financial advisors because there could’ve been a high risk of exposure had incorrect decisions and communications been put out by IFAs. There is now a lot more information and transparency with the crypto markets and they’re no longer seen as a dark ally or black market. Overall it’s a positive move.

The news is welcome to a degree, but lets not forget why the ban was implemented in the first place. At the time the crypto world lacked transparency.

The market has now matured and with the FCA expanding on the Regulatory framework and issuing a "Crypto-roadmap" it supports the regulators view the market can be opened up. This is far better than the current options available to those who solely want to invest in crypto's as more often than not they will use an unregulated platform with little or no protection.
That being said Crypto's are still a high risk proposition, with a high risk of volatility and discussions with my clients on the asset wont change regardless of the regulators stance. It isnt to little or to late as long as the FCA use this initial consultation to build the foundations for a storng regulatory framework.