UK’s Financial Conduct Authority Proposes Allowing Mutual Funds up to 10% Exposure to Crypto ETNs
June 9, 2026
In a significant regulatory development, the United Kingdom’s Financial Conduct Authority (FCA) has proposed permitting certain retail investment funds to hold up to 10% of their assets in cryptocurrency exchange-traded notes (ETNs). This move marks another step towards integrating crypto exchange-traded products (ETPs) more broadly into the UK investment landscape.
Details of the Proposal
The FCA’s latest quarterly consultation paper suggests allowing undertakings for collective investment in transferable securities (UCITS) schemes, alongside certain non-UCITS retail schemes (NURS), to include crypto ETNs as part of their portfolios. These schemes, which are UK regulatory equivalents of mutual funds familiar to US investors, pool money from retail investors into managed portfolios under strict regulatory oversight.
According to the FCA, the proposed 10% exposure limit aims to mitigate risks associated with crypto ETNs, balancing investor protection with innovation:
“Our proposed 10% limit for UCITS and NURS would also mitigate the risk of significant impacts arising from crypto ETN exposure.”
Background and Industry Context
Crypto ETNs provide investors with exposure to digital assets without the need to directly own or custody cryptocurrencies. Such products have been instrumental in driving mainstream adoption of crypto markets globally by offering more accessible and regulated investment routes.
The FCA’s proposal follows an earlier milestone in October 2025, when the regulator lifted its ban on retail investors accessing crypto ETNs—a restriction that had been in place since 2021. This gradual easing signals increasing regulatory confidence in crypto investment products, albeit with safeguards.
However, regulatory constraints in the UK have previously drawn criticism from industry commentators. Some argue that stringent access rules and cautious regulatory posture could place the UK at a competitive disadvantage relative to other financial hubs more aggressively embracing crypto innovations.
Market Reactions and Outlook
Market watchers view the FCA’s proposal as a measured approach, fostering investor access to crypto while controlling risks inherent to volatile digital asset markets. Allowing up to 10% of fund assets in crypto ETNs creates scope for diversification without exposing retail investors to undue potential losses.
The crypto sector in the UK—and global markets broadly—awaits further clarity and final decisions on such regulatory changes. If adopted, this framework could enhance the appeal of UK investment schemes and boost confidence among crypto asset managers and retail investors alike.
About Crypto ETNs and Mutual Funds in the UK
UCITS and NURS are regulated, open-ended investment vehicles that pool funds from retail investors to manage portfolios diversified across various assets. By incorporating crypto ETNs, these funds can offer exposure to cryptocurrencies via regulated products that do not require direct asset custody.
As regulatory dialogues continue, the FCA’s engagement with crypto ETNs reflects the evolving relationship between traditional finance and digital assets, underscoring the UK’s intent to maintain a balanced, competitive, and investor-friendly market environment.
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