Introduction
On October 8th, the previously imposed restriction on retail access to certain cryptocurrency Exchange Traded Notes (cETNs) was finally lifted. As a result, retail investors now have the opportunity to trade these financial products once they are listed and recognized on a UK Investment Exchange.
Regulatory Requirements
Before rolling out these offerings to consumers, it is mandatory for firms to thoroughly review and secure approval for the prospectuses associated with cETNs.
Market Entry Considerations
Caution is advised given the intricate nature of crypto ETNs. Companies that aim to promote these products must ensure they possess the appropriate permissions. In addition, it is important for these firms to notify their designated contact at the Financial Conduct Authority (FCA) about their intentions to provide cETNs.
Regulatory Classifications
These financial instruments are classified as Restricted Mass Market Investments (RMMIs), which brings about specific regulatory responsibilities. Firms entering the market must adhere to stringent financial promotion guidelines, ensuring that all marketing practices are compliant.
Consumer Duty and Guidance
Moreover, the Financial Conduct Authority emphasizes that businesses marketing these cETNs must also align with the Consumer Duty rules. Firms interested in obtaining new permissions to market cETNs can seek guidance by requesting a pre-application meeting with the FCA.
Conclusion
In an effort to regulate crypto assets effectively, the FCA has also shared its strategic framework outlining the way forward in regulating this emerging asset class.
