The United Kingdom has recently expanded access to crypto exchange-traded notes (ETNs) to retail investors, a market segment previously reserved for professional traders. This regulatory shift has triggered aggressive fee competition among ETN issuers competing to attract a growing pool of investors, according to a report by the Financial Times.
Since the Financial Conduct Authority (FCA) lifted its 2021 ban on retail access to crypto-related funds on October 8, several Bitcoin ETN providers have significantly reduced their management fees, with some dropping as low as 0.05%. The FT characterized this emerging pricing landscape as a “cut-throat battle” for investor loyalty. However, fee structures remain varied, with certain crypto-linked ETNs continuing to impose annual charges up to 2.5%.
Notable entrants in the newly accessible retail ETN market include 21Shares, whose Core Bitcoin and Ethereum Core Staking ETPs have reduced fees to 0.1%. Fidelity’s Physical Bitcoin ETP now carries a 0.25% fee, while CoinShares has introduced a Physical Staked Ethereum ETP without any management fees.
The FCA’s decision to reverse its prior restrictions is part of a broader regulatory strategy aimed at fostering a more balanced approach to consumer risk in the digital asset sector. Ian Taylor, a board adviser at industry group CryptoUK, expressed approval of the policy update, calling it “a positive development” towards proportionate regulation.
This regulatory progression is also intertwined with efforts to bolster the United Kingdom’s standing in global cryptocurrency adoption, a position that has lagged recently. A significant point of contention remains the regulatory treatment of stablecoins. Industry participants have voiced concerns over the Bank of England’s initial proposals imposing stringent corporate holding limitations on stablecoin issuers.
Reports from Bloomberg indicate that the Bank of England is evaluating a potential softening of its earlier approach. This reconsideration emerges as the United States advances with the GENIUS Act, which seeks to establish clearer frameworks for stablecoin regulation, prompting the UK to reassess its competitive positioning.
Furthermore, Bank of England Governor Andrew Bailey has modified his rhetoric in recent months. Moving away from earlier statements warning of private stablecoins posing systemic financial risks, Bailey has acknowledged their innovative potential and increasing integration within the financial ecosystem.
The UK regulatory environment continues to evolve as industry stakeholders, regulators, and lawmakers engage in dialogue to balance innovation, investor protection, and financial stability amid rapid developments in the crypto sector.
