Trading 212's Crypto ETN Oversight: What Went Wrong?
A Major Misstep
Trading 212, a prominent player in the online investment arena, recently found itself under regulatory scrutiny. The platform allowed UK customers to trade crypto-linked exchange-traded notes (ETNs) without the necessary approval from the Financial Conduct Authority (FCA). This oversight was revealed in a recent report, highlighting a significant regulatory lapse.
The Return of Crypto ETNs
Crypto ETNs made a comeback in the UK retail market in October 2025 after the FCA lifted a ban that had been in place since 2021. These financial products track the price of digital assets like Bitcoin and require specific regulatory approval to be sold to everyday investors. Despite this, Trading 212 offered these products without the necessary authorization until recently.
Regulatory Compliance Issues
The company only applied for the required permission after being contacted by FCA supervisors. This raises questions about the platform's internal processes and regulatory compliance. Trading 212 briefly paused access to complex instruments, including crypto ETNs, citing internal system upgrades. By Monday, the FCA register showed that Trading 212 had been granted permission to sell debentures.
Strict Rules for Crypto ETNs
Crypto ETNs are classified as restricted mass market investments, meaning they come with strict rules. These include:
- Risk warnings
- Cooling-off periods
- Suitability checks to protect consumers
Other platforms like Interactive Investor, Fidelity, and Freetrade have been offering crypto ETNs since October, but they had the necessary approvals in place when the ban was lifted.
FCA's Emphasis on Regulatory Compliance
The FCA has emphasized the importance of reviewing and approving prospectuses before launching crypto ETNs. These products are complex, and firms must ensure they have the correct permissions to offer them to consumers. The regulator's stance underscores the need for caution and thorough vetting in the crypto space.
Future Outlook for the UK Crypto Market
Looking ahead, the UK crypto market could see a significant boost. A research report from trading platform IG predicted a 20% expansion following the launch of crypto ETNs. The appeal lies in the perceived safety and regulatory oversight these products offer, with 30% of UK adults considering investing in crypto via ETNs.
However, current levels of crypto ownership stand at 12% according to the FCA and 25% according to IG's study. This gap highlights both the potential and the challenges ahead for the crypto market in the UK.
