The Financial Conduct Authority has published guidance for firms planning to offer crypto exchange-traded notes (cETNs) to retail investors.
In an update released today (27 October), the regulator reminded firms that cETNs are classified as Restricted Mass Market Investments and must comply with financial promotion rules.
This includes prohibitions on offering incentives to invest, requirements for robust appropriateness assessments, client categorisation, and cooling-off periods, as well as the inclusion of prominent risk warnings.
“Crypto ETNs are complex products, and firms should ensure they have the correct permissions to offer them to consumers. Where they are planning to offer them, we ask firms to inform their FCA supervisory contact,” the regulator said.
Earlier this month, the FCA lifted the ban on retail access to certain crypto ETNs, allowing them to be listed on the FCA’s Official List and traded on UK-recognised investment exchanges. Prospectuses must be reviewed and approved before the products are made available.
Firms offering cETNs will also need to comply with the Consumer Duty, including obligations to deliver good outcomes for consumers, ensure fair value, and provide clear and timely information.
The FCA added that firms must identify an appropriate target market for each cETN and ensure the product design and distribution meet the needs and objectives of that market.
