The Financial Conduct Authority (FCA) has said it is proposing to lift the ban on crypto exchange traded notes (cETNs) for retail investors.

The move would mean that cETNs could be sold to individual consumers in the UK, rather than just professional investors, if they are traded on an FCA-approved investment exchange.

Similar products are already available in other countries.

The regulator, which is launching a consultation to explore the proposal, said that financial promotion rules would apply so consumers get information on the risks and would not be offered inappropriate incentives to invest, in the same way as if they bought cryptoassets directly.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, executive director of payments and digital assets, FCA. “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 development is the latest in the watchdog’s plans to establish a regulatory framework for cryptocurrencies.

It comes after the FCA outlined its crypto roadmap and recently published proposals on stablecoins as well as other aspects of the regime.

The UK watchdog said that its current ban on retail access to cryptoasset derivatives will remain in place.

The regulator says it will continue to monitor market developments and consider its approach to high-risk investments.

The announcement comes alongside other proposals outlined in the FCA's quarterly consultation paper, including the simplification of reporting requirements for funds’ assessments of value, following feedback to the Consumer Duty Call for Input, which will lead to a significant cost saving for 149 firms who manage more than 3900 funds.

It said the paper also includes plans for the removal of more "unnecessary" data reporting.

Earlier this year, the FCA announced it would remove unnecessary data reporting for 16,000 UK firms.

In April, the regulator said that it has identified three regular returns as viable for decommissioning, which are: Form G: The Retail Investment Adviser Complaints Notifications Form; FSA039: Client Money and Assets; and Section F RMAR.

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