UK Ignites Crypto ETN Fee War After Opening Market to Retail Investors

The United Kingdom has opened the doors for crypto exchange-traded notes (ETNs) to retail investors – a market previously reserved for professional traders – sparking a price war among issuers fiercely competing for market share, according to the Financial Times. In a report published Thursday, the FT highlighted how several Bitcoin ETN issuers have slashed their fees to a mere 0.05%, characterizing the resulting competition as a “cut-throat battle” for investor attention. Conversely, other crypto-linked ETNs continue to levy annual fees as high as 2.5%. This aggressive fee competition follows the Financial Conduct Authority’s (FCA) decision to reverse its 2021 prohibition on retail access to crypto-linked funds, a policy change that became effective on October 8th. At the time of the reversal, Ian Taylor, board advisor at the trade association CryptoUK, told Cointelegraph, “We are delighted to see this reversal,” emphasizing the “progress we’ve made toward introducing a more proportionate approach to consumer risk.” Among the newly accessible ETNs are 21Shares’ Core Bitcoin and Ethereum Core Staking ETPs, with fees reduced to 0.1%; Fidelity’s Physical Bitcoin ETP, now charging 0.25%; and CoinShares’ Physical Staked Ethereum ETP, which currently features no management fee.

UK Rethinking Crypto Stance

The FCA's policy shift is part of a broader effort to revitalize the UK’s position in the global crypto landscape, which had been perceived as lagging. A key point of contention has been the treatment of stablecoins, particularly after industry stakeholders resisted the Bank of England’s (BoE) proposals to impose stringent corporate holding limits. Bloomberg reports that the BoE is now considering easing its stance, driven by concerns that the United States is gaining ground following the passage of the GENIUS Act, designed to provide greater regulatory clarity for stablecoin issuers. Furthermore, BoE Governor Andrew Bailey has recently tempered his rhetoric, moving away from earlier warnings that private stablecoins posed a systemic threat to financial stability. He now acknowledges the potential for innovation and the growing role of this technology within the broader financial system.