The Financial Conduct Authority will lift its ban on retail
access to cryptoasset-backed exchange traded notes on 8 October this year. This
follows a consultation that began in June.
Retail investors will be able to access cETNs if they are
listed on FCA-recognised UK investment exchanges. These are referred to as
Recognised Investment Exchanges.
Firms Must Avoid Misleading Investment Incentives
The FCA said firms must follow financial promotion rules.
These rules are designed to ensure that retail clients receive clear and
accurate information. Incentives to invest must not be misleading or
inappropriate.
Firms must also comply with the Consumer Duty. This sets out
how firms should act to deliver good outcomes for consumers. Despite this,
cETNs will not be protected under the Financial Services Compensation Scheme. The FCA has warned that consumers should understand the risks before
investing.
The FCA stated that the ban on cryptoasset derivatives for
retail investors will stay in place. It said it will continue to review the
crypto market and consider its approach to high-risk investments.
This article was written by Tareq Sikder at www.financemagnates.com.
