Nearly $1 trillion in British savings accounts could open to crypto investment as the UK Financial Conduct Authority prepares to lift a ban on crypto exchange-traded notes.
Exchange-traded notes, or ETNs, are debt instruments that track an underlying asset's price. They are listed and traded on exchanges, and in most respects function the same way as the more common and popular exchange-traded funds.
In January 2021, the FCA banned the sale, marketing, and distribution of derivatives and ETNs that reference unregulated crypto assets to retail investors.
That ban will be reversed on October 8, a move that could vault the UK into a major player in the global crypto market.
"The UK has the potential to be the largest crypto market in Europe, especially if crypto's eligibility for individual savings and self-invested personal pension accounts is confirmed," Dan Gold, founder of Stratiphy, an AI-powered investment platform, told DL News.
In the UK, residents can deposit money to individual savings and self-invested personal pension accounts. Investors do not need to pay tax on investments made through these accounts; however, investment options are limited to assets available on regulated exchanges.
UK investors held over $930 billion in assets through these so-called ISA and SIPP accounts as of 2023, according to government statistics.
It's not guaranteed that crypto ETNs will initially be eligible for these accounts, however. Freetrade, a UK-based fintech platform, is still waiting on final guidance from HMRC, the UK's tax authority, Alex Campbell, the firm's head of external affairs, told DL News.
"Our understanding is that Bitcoin and Ethereum ETNs will be on offer and those will be the ones we offer," Campbell said.
The development comes as crypto regulation in the UK gets a fresh look after a year-long hiatus following the 2024 general election.
In August, a parliamentary group started working to bring cryptocurrency back to the forefront of the legislative process.
On September 17, the FCA opened a consultation on proposed crypto rules. A week later, the UK and US established a new taskforce which aims to enhance collaboration on crypto asset regulation and other financial activities.
The move could give the UK crypto market a significant boost, according to a survey conducted by Norstat on behalf of UK-based trading platform IG.
It found that out of 2,500 UK investors polled, 30% would consider investing in crypto via ETNs. That represents a significant potential increase from current levels of crypto ownership. A November 2024 report from the FCA found that just 12% of UK residents owned crypto.