The Financial Conduct Authority (FCA) in the U.K. has suggested that certain retail investment funds could be permitted to allocate as much as 10% of their assets to cryptocurrency exchange-traded notes (ETNs).
Financial Conduct Authority's New Proposal
In its recent quarterly consultation paper, the FCA proposed that UCITS ("Undertakings for Collective Investment in Transferable Securities") and some non-UCITS retail schemes (NURS) be allowed to invest in crypto ETNs. These funds are comparable to U.S. mutual funds, as they are regulated, open-ended structures that aggregate capital from retail investors for managed portfolios.
According to the FCA, "Our proposed 10% limit for UCITS and NURS would also mitigate the risk of significant impacts arising from crypto ETN exposure." This proposal is seen as a progressive step toward broader acceptance of crypto exchange-traded products (ETPs) in the U.K. under the ETN framework. The FCA had previously lifted a ban on retail investors accessing such funds in October 2025, which had been in effect since 2021.
Investment options that enable individuals to gain exposure to cryptocurrencies without directly purchasing or holding the assets have been key to the mainstream adoption of crypto. However, some experts contend that the existing regulatory challenges in the U.K. could place the country at a competitive disadvantage compared to its global counterparts.
Key Points:
- The FCA has proposed a 10% asset limit in crypto ETNs for certain retail investment funds.
- UCITS and NURS are regulated investment vehicles similar to U.S. mutual funds.
- Critics argue that regulatory barriers may hinder the U.K.'s competitiveness in the crypto space.