UK’s Crypto Pivot: Retail Access Opens as Stablecoin Cap Plan Faces Industry Backlash

Regulators Ease Barriers on Crypto ETNs While Industry Pushes Back on “Unworkable” Stablecoin Caps

TL;DR

• UK regulators have lifted the retail ban on crypto ETNs, granting access to an $800 billion market.
• The Bank of England plans exemptions from stablecoin holding caps but faces sharp criticism from the crypto industry.
• Business caps may be relaxed, but retail limits remain, raising fears of reduced innovation and competitiveness.

Britain’s regulatory stance on crypto is undergoing its sharpest realignment since the 2021 clampdown. The Financial Conduct Authority’s reversal of the four-year ban on retail trading of crypto exchange-traded notes has reopened access to structured Bitcoin and Ethereum products. Trading is expected to begin October 16, 2025, on approved exchanges such as the London Stock Exchange, allowing ordinary investors to gain regulated exposure to crypto within the national framework for the first time.

The move effectively unlocks a potential $800 billion investment market. Roughly £872 billion currently sits in Individual Savings Accounts, and if just 1 percent shifts into crypto ETNs, nearly £8 billion—or about $9 billion—could flow into the market. For a limited window until April 2026, crypto ETNs will qualify for inclusion within stocks-and-shares ISAs before transitioning into the Innovative Finance ISA structure. Consumer protections remain limited, however, as losses on crypto ETNs fall outside the Financial Services Compensation Scheme’s coverage.

Industry platforms are split on readiness. Interactive Investor, IG, FreeTrade, and eToro are preparing to list crypto ETNs, while Hargreaves Lansdown, the country’s largest retail platform, maintains a cautious stance, arguing that “bitcoin is not an asset class” and carries no intrinsic value. Despite skepticism among traditional brokers, roughly 12 million Britons already hold digital assets, signaling robust underlying demand for regulated market access.

While the FCA move represents a milestone for retail investment, the Bank of England’s ongoing stablecoin consultation shows the limits of regulatory flexibility. The central bank is preparing exemptions for exchanges and large crypto firms from proposed holding caps of £10 million for businesses and £10,000–£20,000 for individuals. Yet most industry leaders consider the changes cosmetic, arguing that the individual caps remain “cumbersome, costly, and potentially unworkable.” Critics highlight that individuals can easily maintain multiple wallets, making total-balance enforcement both technically unrealistic and privacy-sensitive.

Former Bank of England fintech officials warn that imposing responsibility on stablecoin issuers or wallet providers to monitor user balances would create compliance chaos. Because wallet infrastructures are decentralized and frequently pseudonymous, no single party can track aggregate holdings without violating privacy norms. Moreover, given that most UK residents hold less than £5,000 in current accounts, the cap may do little to mitigate systemic risk while potentially discouraging participation in stablecoin-based payments.

Several executives within the country’s crypto ecosystem warn that the UK risks undermining its competitiveness if these restrictions remain. They argue that limiting stablecoin exposure while peers in the United States and European Union operate under frameworks without such caps could drive innovation offshore. The Bank’s consultation paper acknowledges the criticism, hinting that caps could be lifted once risks to financial stability are “sufficiently mitigated,” but offers no timeline.

Governor Andrew Bailey’s rhetoric has softened notably. Long viewed as skeptical of digital currencies, he now argues that stablecoins “should not be opposed as a matter of principle” and, if widely used for payments, should be regulated “like money.” The central bank’s Digital Securities Sandbox will soon test stablecoins as settlement assets, and policymakers are weighing whether systemic issuers should hold reserves in short-term UK government bonds—an approach consistent with emerging standards in the U.S. and EU.

This article has been refined and enhanced by ChatGPT.