FCA Allows Retail Investment in Crypto ETNs
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- Last Updated on 7 August, 2025
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[2025] 177 taxmann.com 172 (Article)
World Corporate Law News – Weekly Global Roundup
This week’s edition brings notable updates in the securities law landscape, featuring transformative regulatory shifts in crypto asset management, artificial intelligence governance, and investor protections from leading global regulators—the UK’s FCA and the U.S. SEC.
1. SECURITIES LAW
1.1 FCA Opens Retail Access to Crypto Exchange Traded Notes (cETNs)
Date: August 1, 2025
Jurisdiction: United Kingdom
In a significant policy move, the UK Financial Conduct Authority (FCA) has opened retail investor access to crypto Exchange Traded Notes (cETNs). Previously, such products were restricted to professional or institutional investors due to perceived volatility and complexity.
Under the new framework, cETNs available to retail investors must be listed and traded on FCA-recognized UK-based investment exchanges (Recognised Investment Exchanges or RIEs). To ensure retail protection, strict financial promotion rules will apply, including clear risk disclosures and restrictions on promotional incentives. This move marks a step toward democratizing access to crypto-linked products, while balancing investor protection.
1.2 SEC Permits In-Kind Creation & Redemption for Crypto ETPs
Date: July 29, 2025
Jurisdiction: United States
In a pivotal development for U.S. crypto markets, the Securities and Exchange Commission (SEC) has approved in-kind creations and redemptions for crypto asset Exchange Traded Products (ETPs). This marks a shift from earlier policies under which spot Bitcoin and Ether ETPs could only be created or redeemed using cash-only mechanisms.
The new approval aligns crypto ETPs with traditional commodity-based ETPs, where authorized participants can deliver or receive actual crypto assets (rather than cash) when creating or redeeming shares. This could enhance liquidity, reduce tracking errors, and lower transaction costs, ultimately benefiting institutional and retail investors alike.
1.3 SEC Launches AI Task Force for Regulatory Innovation
Date: August 1, 2025
Jurisdiction: United States
The SEC has officially entered the AI era by launching a dedicated Artificial Intelligence Task Force aimed at integrating responsible AI use across its operations. The Task Force will focus on improving regulatory efficiency, enforcement capabilities, and market surveillance through AI-powered tools and systems.
Valerie Szczepanik, a recognized expert in fintech and digital assets, has been appointed as the SEC’s first Chief AI Officer, leading the initiative. This move reflects the agency’s proactive approach to leveraging emerging technologies for smarter regulation, enhanced data analytics, and improved investor protection.
Summary
This week’s updates signal growing regulatory sophistication in dealing with digital assets and cutting-edge technologies. While the FCA’s move signals greater openness toward retail crypto exposure under controlled conditions, the SEC’s dual announcements—enabling in-kind crypto transactions and institutionalizing AI oversight—demonstrate a balanced push for innovation alongside robust market safeguards.
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