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#Bitcoin fixes this

When the SHTF I want Freddie on my side: #Bitcoin ------ "12 September 2024 Rt Hon Tulip Siddiq MP Bitcoin Policy UK - Research is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. Dear Minister, We write further to our correspondence with your predecessor as City Minister (letter dated 3 January 2024 and attached as Annex 1), to which the Minister responded on 5 February 2024 (full details here and attached as Annex 2). As part of this correspondence, we highlighted how FCA policies have prevented residents of the United Kingdom from accessing certain Bitcoin ETF products offered by companies registered in England and Wales. In light of: 1) recent regulatory activity in the US, with the SEC approving the Bitcoin ETFs; 2) the launch on the London Stock Exchange of Bitcoin ETNs for professional investors only; and 3) the advent of a new Labour government, Bitcoin Policy UK (BPUK) now writes to request that this government review the regulatory environment in the UK as it relates to the Bitcoin ETFs and ETNs, to allow both UK retail and institutional investors access to them. Our view is that the FCA’s refusal to approve retail investor access to Bitcoin products is a position that diminishes the standing of the FCA as a regulator, diminishes the status of the United Kingdom as a sophisticated market for financial products, and denies UK investors the ability to allocate their portfolios as they choose in a regulated market. Inconsistency between US and UK regulatory environments On 10 January 2024, the United States Securities and Exchange Commission approved 11 Bitcoin ETF proposals, offering retail investors in the US the opportunity to invest in such funds. These ETFs are now widely accepted as “the most successful ETF launches ever in the US, by a large margin.” As part of the SEC’s approval of the Bitcoin ETFs, Chair Gensler stated that investors will benefit from: 1) the disclosures included in public registration statements and periodic filings; and 2) reduced risk of fraud and manipulation as a consequence of stringent rules put in place for these ETFs. Such safeguards make the Bitcoin ETFs an ideal vehicle for retail customers who may not be comfortable purchasing Bitcoin from specialised exchanges. The approval of these Bitcoin ETFs in the US, places the regulatory position of the US in stark contrast to that of the UK, with the FCA’s current position being that such Bitcoin ETFs are ‘ill-suited for retail consumers’. Hargreaves Lansdown, one of the UK’s largest financial services organisations, have stated (see detail in Annex 3), that even though these products have been approved by the stringent requirements of the United States Securities and Exchange Commission, that they will not be able to offer exposure to the US ETFs via their platform. BPUK maintains that this clear inconsistency between the regulatory position of the UK and the US, as it relates to the Bitcoin ETFs, is untenable, and we request that the Labour government work closely with the FCA to rectify it, by bringing the UK regulatory position in line with that of the US. Inconsistency in regulatory position toward Bitcoin ETF and the underlying asset Retail investors within the UK are currently able to purchase Bitcoin via any number of exchanges, but are not allowed to purchase the Bitcoin ETFs nor the ETNs. This is a glaring inconsistency that diminishes the reputation of both the FCA, and of the UK as a sophisticated jurisdiction in which to offer financial products. It is almost unheard of for a retail investor to be able to purchase an underlying asset (in this case, Bitcoin) but not to be permitted to purchase a regulated product that tracks the performance of that asset. If, as the FCA argue, this asset is ‘ill-suited’ for retail investors due to risk of harm, why does the FCA itself provide a registration regime so that firms may offer these very same ‘ill suited’ assets to retail investors, who, by the FCA’s own reasoning, would be harmed by them? Reputation of the UK as a centre for investment The ongoing refusal of the FCA to approve retail investor access to the Bitcoin ETFs and ETNs, together with the inconsistencies already cited in this letter, put the UK in a difficult and precarious position as a centre for finance and investment. The growth and influence of Bitcoin will only continue to grow, and the UK needs to be properly positioned for this. In January 2024, when the SEC approved the United States Bitcoin ETFs, Commissioner Hester Peirce made a detailed statement. We agree with her that the “arbitrary and capricious treatment of applications in this area will continue to harm our reputation far beyond crypto. Diminished trust from the public will inhibit our ability to regulate the markets effectively. This saga will taint future interactions between the industry and our staff and will dampen the rich, informative dialogue that best protects investors.” The FCA and the UK face exactly these same risks. Investors of sound mind should be free to express their own thoughts on investment products by buying and selling them on regulated exchanges. While we note that the FCA remains an independent regulator, in light of the points highlighted within this letter, we urge all relevant parties to review and revise their current position on the Bitcoin ETF and ETN products in the UK, so that they can be made accessible to both institutional and retail investors alike. We remain at your disposal to assist in any discussion or the provision of any advice and expertise that you may require in relation to the matters raised in this letter. Yours sincerely, Freddie New Co-Founder and Head of Policy Bitcoin Policy UK"