Should UK Investors Have Easier Access to
Crypto?
Cryptocurrency investors and firms in the UK
are expressing frustration at being left behind their US counterparts, after US
regulators approved several mainstream products that have made it easier than ever
for the investing public to buy bitcoin. Earlier this year the US
Securities and Exchange Commission approved a series of bitcoin spot exchange
traded funds, investment vehicles that offer exposure to bitcoin, the world’s
best-known cryptocurrency. The 11 newly approved funds, which are barred to UK
investors, are issued by some of Wall Street’s biggest names, including
Fidelity and BlackRock, the world’s largest asset manager.
The January launch of these products propelled
bitcoin last month to a record
high price of $73,800, and has given it
a sense of recognized legitimacy it has never previously achieved in its near
15-year history. Americans eager to invest in bitcoin can now do so via
highly regulated products, rather than having to buy bitcoin directly on
offshore crypto exchanges that have controversial compliance
histories. Wall Street’s new funds — which have pulled in well over
$10bn in fresh capital in less than three months of trading — have prompted
investors in the UK to question whether Westminster’s own efforts to establish
a digital assets hub in London have fallen behind.
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Breath-taking returns
Spot bitcoin ETFs are not available in the UK,
and in 2021 the Financial Conduct Authority placed a ban on crypto-related
derivatives to retail customers, saying the underlying crypto assets have “no
reliable basis for valuation”. “Bitcoin is by far the most well-known
crypto asset, and for it to be very difficult for the UK public to be able to
buy it, how can we claim to be a crypto hub if we only offer risky ways of
buying this asset?” said Tim Lowe, strategic adviser at London-based
institutional staking firm Attestant.
Some say the regulator has deprived UK
investors of one of the best-performing investments available. Daniel Masters,
executive chair at crypto investment group CoinShares, says: “The FCA’s job is
to ensure a level playing field, not to decide what assets people should or
shouldn’t invest in.” Since the newly approved league of ETFs started
trading on January 11, bitcoin’s price has risen sharply. It began the year
valued at about $42,200, still far off its previous all-time high of
$69,000.
The barrier to UK investors
The token’s returns have compounded
frustrations in London, where industry members say regulators have failed to
provide consumers with a safe and accessible route to bitcoin. Masters
argues hundreds of millions of dollars were lost by UK investors doing business
on FTX, the
cryptocurrency exchange owned by Sam Bankman-Fried that collapsed in 2022.
But that was because they were able to access it, not because it was registered
or regulated.
“You’re creating this weird outcome where
retail investors are still going to get access to these products but they will
go to offshore, less regulated exchanges that are sketchy for a whole host of
reasons,” said Alex Campbell of London-based investing app Free trade.
In the aftermath of bitcoin’s latest
record-setting run, the UK’s financial regulator has ceded some ground to the
sector, choosing to allow the creation of some crypto-linked exchange traded
funds — debt securities that track an underlying asset — to list on the stock
market. But crucially, these are only available to professional investors, not
to retail investors. As of next month, issuers will be able to list notes
that are linked not only to bitcoin but to ether — the second most popular
cryptocurrency on the market — on the London Stock Exchange.
