UK Lifts Ban on Crypto ETNs as Market Matures

The move proves the UK’s growing market maturity and is a major step toward integrating digital assets into the country’s financial system. New tax rules also enable crypto ETNs to be included in pension schemes and ISAs. Meanwhile, in the US, Representative Bryan Steil confirmed that the CLARITY Act is still on track despite the ongoing government shutdown. Steil is optimistic that lawmakers could still pass the bill once operations resume.

Crypto ETNs Return to UK

The United Kingdom officially lifted its ban on crypto exchange-traded notes (ETNs). This is a huge toward the mainstream integration of digital assets in the country’s financial markets. The Financial Conduct Authority (FCA) announced on Wednesday that retail investors can now access crypto ETNs through FCA-approved exchanges, which is a reversal from a restriction that was in place since January of 2021.

Crypto ETNs are debt-based financial instruments that allow investors to gain exposure to cryptocurrencies without directly owning the underlying assets. These products trade like traditional securities, with the crypto held securely by regulated custodians. 

Announcement from the FCA

The FCA said the decision was made thanks to the market’s growing maturity and the regulator’s better understanding of digital asset products. “Since we restricted retail access to crypto ETNs, the market has evolved, and products have become more mainstream and better understood,” said David Geale, the FCA’s executive director of payments and digital finance. “In light of this, we’re providing consumers with more choice, while ensuring there are protections in place.”

When the FCA first imposed the ban in 2021, it pointed to the risks associated with crypto volatility, market manipulation, and a lack of legitimate investment need. However, the tone shifted after the UK government moved to establish a clearer and more inclusive framework for digital assets. The regulator explained that while crypto ETNs are now available to retail investors, its separate ban on crypto derivatives is still in force, as they are still seen as too risky for the general public.

The government also introduced new tax rules for crypto ETNs. Starting Oct. 8, these products can be included in registered pension schemes, and from April 2026, they will also be eligible for Stocks & Shares Individual Savings Accounts (ISAs), giving UK citizens tax-efficient options to invest in crypto-linked products.

Part of a statement from the UK Government

A report by IG Group forecasts that the UK crypto market could expand by up to 20% after this regulatory shift. The firm’s research found that 30% of UK adults would consider investing in crypto via ETNs, largely because of the perceived safety and regulatory oversight these products provide. 

CLARITY Act Still on Track

In the US, Wisconsin Representative Bryan Steil reassured people that Republicans still plan to pass the CLARITY Act — the crypto market structure bill — before 2026, despite the ongoing US government shutdown. In an interview with CNBC on Wednesday, Steil said the timeline for establishing clearer regulations for the digital asset industry is still on track. He is optimistic that once the shutdown ends, lawmakers could “hit the ground running” and move the bill forward in the Senate.

Steil is one of the original cosponsors of the CLARITY Act, and explained that if the Senate adopts the House version of the bill as its base text, there is still a real chance it could be signed into law by the end of the year. 

CNBC interview with Representative Bryan Steil

His comments came as the Senate failed to pass a stopgap funding measure, which extended the government shutdown to its eighth day. The lapse in funding forced many federal agencies to scale back operations, furlough employees, and disrupt air travel, raising concerns about the impact on financial regulators and pending crypto-related decisions.

The House passed its version of the CLARITY Act in July as part of the Republican-led “crypto week,” to create a comprehensive framework for digital assets and provide what lawmakers called “regulatory clarity” for the industry. However, progress slowed after the bill reached the Senate, where Wyoming Senator Cynthia Lummis previously pledged that the banking committee will vote on related legislation by the end of September. Those plans were delayed thanks to political gridlock.

During the shutdown, Congress is still in session and lawmakers are also still to be paid, but legislative activity has been severely limited. Speaker Mike Johnson said the House will not reconvene until the Senate passes a bill to reopen the government. 

Meanwhile, the US Securities and Exchange Commission (SEC) is operating with “an extremely limited number of staff” under a contingency plan from August. Reviews of cryptocurrency-linked exchange-traded fund (ETF) applications are likely paused, though the SEC’s electronic systems are functional for filings.

While Steil is confident that bipartisan cooperation could still bring the CLARITY Act across the finish line, the shutdown added some uncertainty to the timeline.