FCA proposes allowing UK retail funds to hold crypto ETNs with a 10% portfolio cap.
UK Crypto News
UK retail investment funds could soon hold cryptocurrency exchange-traded notes (ETNs) as part of their portfolios. The Financial Conduct Authority (FCA) published the proposal on June 9 as part of its latest quarterly consultation paper. The regulator set a 10% ceiling on how much of a fund's assets could be allocated to crypto ETNs.
Regulated Retail Funds in Scope
The proposal applies to two types of regulated fund structures. The first is Undertakings for Collective Investment in Transferable Securities (UCITS) schemes, while the second covers a subset of non-UCITS retail schemes (NURS). Both are open-ended structures regulated under UK financial law that pool retail investor capital into managed portfolios, functioning similarly to mutual funds in the US.
The FCA said the proposed cap is intended to limit the financial risk that crypto ETN exposure could introduce into these fund structures. "Our proposed 10% limit for UCITS and NURS would also mitigate the risk of significant impacts arising from crypto ETN exposure," the regulator stated in the consultation paper. The consultation is open for public comment before any rule change takes effect.
The June 9 proposal is the FCA's second major move on crypto ETPs in less than a year. In October 2025, the regulator lifted a ban on retail investor access to crypto exchange-traded products that had been active since 2021. The new proposal would extend that framework by allowing collective investment schemes, not just individual retail investors, to hold these instruments within a defined limit.
Crypto ETPs have become one of the primary routes through which mainstream investors gain exposure to digital assets without holding them directly. Their rapid growth across the US and parts of Europe has intensified calls for the UK to align its regulatory framework with peer markets. Critics have argued that the existing restrictions place UK-based fund managers at a structural disadvantage.
The FCA did not specify a timeline for when the consultation will close or when any final rule might be implemented. The proposal remains subject to public feedback before it can be adopted.
Related Article: UK FCA Consults on Crypto Scope Before 2027 Regulatory Launch
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