The UK Financial Conduct Authority (FCA) has today published a notice to companies wishing to offer cryptocurrency exchange traded notes (cETNs).
Consumers can now access cryptocurrency exchange traded notes (cETNs), with many products available.
The FCA lifted its ban on retail access to certain cETNs on 8 October. Retail consumers can now access cETNs when they report to the FCA Official list and listed for trading on a UK Recognized Investment Exchange.
Prospectuses must be reviewed and approved before products are available. The FCA had already reviewed retail crypto ETN prospectuses in preparation for the lifting of the ban on 8 October.
Crypto ETNs are complex products and companies should ensure they have the right rights to offer them to consumers. Where they plan to offer them, the FCA asks firms to inform the FCA’s supervisory contact.
These products are categorized as Restricted Mass Market Investments (RMMIs). Companies offering them will have to comply with financial promotion rules.
This means that businesses must:
- Not to offer any incentive to invest.
- You have reliable suitability assessments, customer categorization and cooling-off periods.
- Highlight relevant hazard warnings.
- Companies offering cETNs will also have to comply with other rules, including consumer duty. This includes provisions requiring companies to:
- Act to get good results for consumers.
- It enables and supports consumers to pursue their financial goals.
- Act in good faith towards consumers and avoid causing them foreseeable harm.
- Identify a target consumer market for a cETN, design the product to meet the needs, characteristics and objectives of that target market and take reasonable steps to ensure that a cETN is distributed to the target market.
- Ensure that cETNs provide fair value to consumers in the target market.
- Make sure consumers are given the information they need, at the right time, and presented in a way they can understand.
If a firm wishes to apply for authorization or new licenses to offer cETNs, it can request a pre-application meeting through the FCA’s pre-application support service.