The Financial Conduct Authority (FCA) will allow recognised investment exchanges to create a UK-listed market segment for cryptoasset-backed Exchange Traded Notes (cETNs) for professional investors, the watchdog said on Monday (11 March).

Professional investors, such as authorised investment firms and credit institutions, can access these cETNs, provided the products meet the UK listing requirements, including prospectus and ongoing disclosure obligations.

Exchanges must ensure sufficient controls for orderly trading and proper protection for professional investors, with the FCA emphasising the need for ongoing vigilance.

The FCA maintains its belief that cETNs and crypto derivatives are unsuitable for retail consumers, and the ban on selling these products to retail consumers remains in effect.

Crypto assets are highlighted as high risk and largely unregulated, with investors warned to be prepared for the potential loss of all their invested funds.

The UK implemented its first set of regulations to oversee the cryptocurrency sector in October 2023, with a focus on consumer protection and financial stability.

The FCA collaborates with government, international partners, and industry to develop the UK’s cryptoasset regulatory regime and lead international standards in this area.

Specific details and processes for listing cETNs will be considered on a case-by-case basis by the FCA, with exchanges responsible for implementing professional-only market segments.

The FCA reiterated the importance of exchanges understanding and mitigating the risks of admitting crypto-linked instruments to trading.

Professional investors are defined as authorised or regulated firms operating in financial markets.