Madeleine Black, Associate Analyst, Manager Research at Morningstar, has commented on the FCA’s allowance of crypto ETN sales to UK retail investors: “The FCA will tomorrow (8 October 2025) reverse its stance on allowing crypto ETNs to be sold to retail investors. This marks another step in crypto’s long, picaresque journey into the financial mainstream. However, just because the FCA permits these products does not mean they are suitable for most investors.
“Crypto’s extreme price volatility often fuels over-trading and gambling-like behaviour, which has historically led to poor investor outcomes. Sensible investors should only consider crypto exposure if they adopt a long-term horizon and keep it as a small allocation within a broadly diversified portfolio.
“While this move represents a significant step toward broader acceptance of crypto, the real catalyst for mass adoption in the UK may be the possible approval of crypto ETNs within ISAs later this year. The tax advantages of such a change could prove far more influential in driving uptake.”
Key takeaways from the Morningstar report include:
Investor demand for European crypto ETPs surged in the third quarter of 2025, with net inflows reaching EUR972 million, a new quarterly high.
Flows so far in 2025 amounted to EUR1.7 billion, on course to set a new annual high for this segment of the ETP market.
CoinShares, 21Shares, and WisdomTree are the leading providers of Europe-domiciled crypto ETPs by assets under management as at end of Q3 2025.
Bitcoin and Ether are the largest cryptocurrencies by market cap. Under new FCA rules, ETNs offering exposure to both will be available to retail investors.
Bitcoin’s dominance as the primary cryptoasset is clear in the European crypto ETP market, where single-asset bitcoin products represent nearly half of total assets under management.
The leading cryptocurrencies, bitcoin and ether, have delivered strong returns but with far greater volatility than traditional risky assets, such as equities, Morningstar reports, adding that this heightened risk/reward profile means cryptocurrencies should represent only a modest allocation within a diversified portfolio, if included at all.
“Given their extreme price swings, uncertain long-term prospects, and valuation challenges, a maximum allocation of 5 per cent is prudent, with a minimum holding period of 10 years.”
