Conservative UK Member of Parliament Alun Cairns is urging the Financial Conduct Authority (FCA) to reconsider its ban on crypto exchange-traded products (ETPs) for retail investors. In an op-ed published on Politics.co.uk on Thursday, Cairns expressed concerns that the UK is lagging behind other major financial markets.
The UK has taken a cautious approach to allowing direct purchases of these products, which diverges from the stance of other major financial markets worldwide. Previous warnings from regulators have highlighted the potential risks of ETPs for everyday investors, cautioning that they could lead to financial losses.
“While the FCA continues to caution individuals about the high risk and largely unregulated nature of cryptoassets, it’s important for those investing to be aware that they could potentially lose all their invested funds,” stated the FCA in 2020.
Despite its reservations, the FCA made a partial concession in March by permitting established exchanges to offer crypto exchange-traded notes (cETNs), but exclusively to professional investors.
Cairns, who plays a significant role in advising Parliament on financial matters, argued that these restrictions are excluding retail crypto investors from potentially lucrative opportunities and hindering the government’s ambition to position the UK as a global leader in Web3 technologies.
His remarks come in the wake of Hong Kong’s recent launch of the first spot crypto ETFs in Asia, positioning the region as a competitor to the US in the race to dominate the burgeoning market.
Can the UK Close the Gap with Europe’s Lead in Crypto ETPs?
Cairns believes that the crypto market has evolved considerably since the FCA’s last review and asserts that it’s time for decisive action. He cited Europe’s embrace of over 70 crypto ETPs collectively holding $7.6 billion in Bitcoin and other cryptocurrencies as evidence of a thriving market.
“Other European jurisdictions like Sweden, Germany, Norway, Netherlands, & Switzerland have embraced these products and we can learn from their early moves,” Cairns noted.
He contends that permitting similar crypto ETPs on the London Stock Exchange would position the UK as a frontrunner in the global crypto landscape, fostering new digital opportunities and cementing the country’s status as a crypto-friendly hub.
