Crypto mis-selling: understanding the FCA’s evolving oversight

In January 2021, the Financial Conduct Authority (“FCA”) banned the sale of derivatives and exchange traded notes (“ETNs”) that reference certain types of cryptoassets to retail consumers. This ban also included the marketing and distribution of such derivates and ETNs. At the time, the FCA explained that this action was being taken due to the harm posed by such products, as consumers could be subject to sudden and unexpected losses.

New legislation and regulation

Much has changed in respect of crypto since January 2021, and while crypto is still relatively new and evolving, there is now a much greater awareness and understanding of what crypto is and how it works. To reflect this evolving landscape, and acknowledging that crypto is not going anywhere, the Government published draft legislation in April 2025 detailing proposed regulation for cryptoasset activities. The policy note published with the draft legislation explains that the aim is to bring various cryptoasset activities within the current regulatory perimeter.

Our previous article provided details of the FCA Roadmap, which set out a timeline for the proposed cryptoasset regime. Following on from this roadmap, the FCA has announced that from 8 October 2025, firms will be able to give retail consumers access to crypto ETNs. This marks a move away from the previous restrictions, and the FCA have said that this change is due to the market evolving, and that products have become more mainstream and better understood. There are still some restrictions however, and crypto ETNs must be traded on an FCA-approved, UK-based, investment exchange.

Consumer duty

The changes announced by the FCA mean that firms offering services to assist retail customers with buying crypto ETNs will be subject to the FCA’s Consumer Duty. The FCA introduced the Consumer Duty from 31 July 2023, and it essentially means that consumers should receive easy to understand communications, products and services that meet their needs and offer fair value, and that they get the support they need.

Whilst consumers will be provided with some protection under the above Consumer Duty, the FCA have confirmed that no coverage under the Financial Services Compensation Scheme (“FSCS”) will be offered in respect of crypto ETNs. This means that in the event that a firm fails, or is unable to pay claims against it, no ‘safety net’ will be provided by FSCS.

What does this mean for consumers and advisors?

Given that the sale of various types of cryptoassets to consumers has been banned by the FCA since 2021, the change in regulation is likely to have an impact on both consumers and advisors.

As the FCA have explained that firms providing services in respect of buying crypto ETNs will be subject to the Consumer Duty, firms will need to satisfy themselves that they are able to meet the high standards of consumer protection before offering any services. This could mean that firms are slow to offer the newly regulated services, as there is a risk of mis-selling if the products are not properly understood by advisors.

For consumers, it should provide some comfort that the Consumer Duty will and does apply where firms are able to provide services in respect of crypto. There are however limitations on the type of crypto ETNs which can be accessed, as they must be traded on an FCA-approved, UK-based, investment exchange. This is likely to be a significant limitation for consumers, as the vast majority of crypto exchanges are not UK-based, let alone FCA-approved. Given the change in regulations however, this may change.

How can Ellis Jones help?

If you believe that you may have been mis-sold crypto ETNs under the new regulations, we are able to assist with considering, and pursuing claims, against financial advisors and firms.

We may also be able to assist if you believe that you have been the victim of a crypto fraud or scam. As we have acted for a number of clients in respect of obtaining freezing injunctions, rug pull scams, and considering how else to recover assets.

If you would like help or advice, please do not hesitate to contact us on 01202 525333 or by email at cryptocurrency@ellisjones.co.uk.