UK Crypto ETNs: FCA approval, how they work, and why they are not a halal ETF

From 8 October 2025 the Financial Conduct Authority will permit retail access to crypto exchange-traded notes, provided those notes are admitted to trading on a UK recognised investment exchange such as the London Stock Exchange and are sold under the usual financial-promotion and Consumer Duty standards. The FCA also confirms there is no protection from the Financial Services Compensation Scheme.

On the London Stock Exchange a dedicated Crypto ETN segment has been operating for professional investors since 2024. By July 2025 the exchange reported eight issuers and 17 Crypto ETNs across 34 currency lines, all providing exposure to Bitcoin or Ether. These are the lines expected to become available to retail investors once the rule change takes effect.

The legal form is decisive. The LSE’s own admission factsheet states that ETNs are debt securities that provide exposure to an underlying asset, and that Crypto ETNs trade on dedicated segments. If a product is a debt security in law, what trades on exchange is a debt claim rather than ownership of the asset.

A current London prospectus shows the mechanics clearly. The 21Shares UK Base Prospectus is a base prospectus for non-equity, derivative securities and records that only Bitcoin and Ether are approved crypto assets for LSE listings under that programme. The same document explains that investors are not entitled to the underlying asset, that physical delivery is excluded except in specific cases, that redemptions are paid in fiat, and that the redemption amount can, in defined circumstances, be reduced to zero. These are core payment and settlement terms, not marketing copy.

Another London issuer makes the point in plain words. Invesco’s Key Information Document calls its product a limited-recourse debt security fully secured by the underlying Bitcoin, with cash settlement by reference to a published bitcoin price. Security over collateral supports the issuer’s promise to pay; it does not turn the investor into the owner of the coins.

This is why “physically backed” does not make a Crypto ETN equivalent to a halal ETF. Bitcoin may be a permissible asset, but the note is not an ownership share in a pool of assets. It is a claim on an issuer whose payout is calculated from a coin entitlement and a reference price, net of fees, and it carries limited recourse and issuer or custody risk. An ETF, by contrast, can only be considered for Shariah compliance when it is a genuine fund or trust that gives investors ownership of the underlying assets and operates without prohibited elements such as interest-based cash management or impermissible derivatives. Many ETFs do not meet that bar, particularly synthetic or swap-based variants. The two wrappers solve for exposure in different legal ways.

A common source of confusion is the word “ETP”. Some issuer websites and media describe “crypto ETPs” and suggest they are similar to ETFs. In London, the listed products opening to retail are Crypto ETNs, not ETFs. “ETP” here is a marketing umbrella; in legal form these London products are notes.

The practical takeaway for readers is simple. From 8 October UK investors will be able to buy exchange-traded exposure to Bitcoin and Ether in the form of London-listed Crypto ETNs. These instruments are debt securities by the exchange’s definition and by issuer documentation. They are usually collateralised, they settle in cash, investors have no claim to specific coins, and the redemption amount moves with the market and can be reduced in defined stress events. That makes them very different from a spot ETF designed to provide ownership-style exposure.

Conclusion

Crypto ETNs becoming available to UK retail investors is an important market milestone, but it is not the arrival of a halal crypto ETF. The London product is a cash-settled, limited-recourse note that references a crypto price. Treat it and describe it as such, even when the issuer holds coins in custody and even when the referenced asset is halal. Do not rely on marketing that labels everything “ETP” or implies ETNs are “ETF-like”. For Shariah-minded investors, the key checks are the wrapper’s legal form, entitlement and settlement terms. Until a UK product is offered in a true ownership-based fund or trust structure that meets operational requirements, London’s crypto exposure for retail remains a debt-note proposition, not a halal ETF.