It paves the way to ordinary investors being able to buy Bitcoin and Ethereum via low-cost funds. ETNs work like exchange-traded funds (ETFs), which are used by many investors and are cheaply bought on the stock exchange.
They try to replicate the performance of an asset, in the same way that ETFs replicate the performance of an index.
David Geale, executive director of payments and digital assets at the FCA, said the regulator would now consult on whether to do this.
He said: “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”
The move is a change in tone from the regulator, which last year allowed the products for professional traders but said they were “ill-suited” to retail investors because of “the harm they pose”.
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Geale said the move was part of the regulator’s plan to establish a regulatory framework for crypto.
The regulator has outlined its crypto roadmap and recently published proposals on stablecoins as well as other aspects of the regime.
Geale added that similar products are already available in other countries and the notes could only be sold if they’re traded on an FCA-approved investment exchange (a recognised investment exchange (RIE)).
Financial promotion rules would apply so consumers get information on the risks, he added.
Government regulates crypto
Chancellor Rachel Reeves announced in April that firms offering services for cryptoassets like Bitcoin and Ethereum will be subject to new, clear rules, and published draft legislation for regulating cryptoassets.
Under the new rules, she said, crypto firms with UK customers will have to meet clear standards on transparency, consumer protection, and operational resilience.
Related: Fraud complaints at record high as crypto-investment scams surge