Retail Investor

A retail investor is a non-professional market participant entitled to the highest protective standards under MiCA and FCA crypto frameworks, reflecting recognition that retail clients lack expertise, resources, and risk-bearing capacity of institutional or qualified investors.

CASPs serving retail investors must provide clear risk disclosures emphasizing volatility, loss potential, and lack of deposit insurance, limit exposure to high-risk or leveraged crypto assets through product restrictions or warnings, conduct appropriateness testing assessing knowledge and experience before enabling complex product access, and provide cooling-off periods before first-time purchases allowing reconsideration.

In the UK, new FCA PS23/6 rules and June 2025 consultation proposals restrict financial promotions for crypto assets to retail investors, ban certain high-risk products including derivatives and leveraged tokens, require categorization of crypto assets by risk level, and impose staking participation limits. MiCA similarly prohibits misleading marketing to retail clients, requires plain language risk disclosures, mandates complaints handling procedures, and enables retail clients to withdraw from distance contracts within 14 days. Enhanced retail protections reflect regulatory concern that unsophisticated investors have suffered disproportionate losses in crypto markets due to volatility, fraud, exchange failures, and lack of understanding of technological and custody risks inherent to digital assets.