ETNs are debt securities that track an underlying asset but are traded and settled through a central market entity like a stock exchange and securities depository. The news pushed Bitcoin and Ethereum to fresh all-time highs, with Bitcoin surpassing $71,000 (around £55,300) and Ethereum touching $4,000 (around £3,120) for the first time.

The FCA’s move comes after it previously banned crypto-related derivatives, including exchange-traded products, due to concerns over the amount of leverage available to consumers. However, the regulator now believes that exchanges and professional investors should be able to better establish whether crypto-ETNs meet their risk appetite, given the increased trading history and data available.

The FCA maintains that crypto derivatives remain ill-suited for retail consumers due to the potential harm they pose, and the ban on the sale of ETNs to retail consumers remains in place.

The London Stock Exchange has stated that securities behind the ETNs cannot be leveraged and must be held in offline storage vaults by custodians subject to anti-money laundering rules in the UK, EU, Jersey, the US, and Switzerland.