FCA Proposes Allowing UK Retail Funds to Invest Up to 10% in Crypto ETNs

The United Kingdom’s Financial Conduct Authority (FCA) has proposed new rules that would allow certain retail investment funds to allocate up to 10% of their assets to cryptocurrency exchange-traded notes (ETNs). The proposal, outlined in the regulator’s latest quarterly consultation paper, applies to UCITS (Undertakings for Collective Investment in Transferable Securities) funds and selected non-UCITS retail schemes (NURS).

UCITS and NURS are regulated investment vehicles that operate similarly to mutual funds in the United States. These open-ended funds pool capital from retail investors and invest it across diversified portfolios managed by professional fund managers.

According to the FCA, the proposed 10% investment cap is designed to limit potential risks associated with crypto asset exposure while allowing retail investors broader access to digital asset investment products. The regulator stated that the restriction would help reduce the likelihood of significant impacts arising from investments in crypto ETNs.

The proposal represents another milestone in the UK’s evolving approach to cryptocurrency investment products. In October 2025, the FCA lifted its long-standing ban on retail access to crypto exchange-traded products (ETPs), a restriction that had been in place since 2021. The latest proposal signals continued progress toward integrating regulated crypto investment options into mainstream financial markets.

Crypto ETNs and other exchange-traded products have become increasingly popular among investors seeking exposure to digital assets without directly purchasing, storing, or managing cryptocurrencies. These investment vehicles offer a regulated and convenient way to participate in the cryptocurrency market while avoiding the complexities of self-custody.

Industry observers have long argued that restrictive regulations on crypto investment products could place the UK at a competitive disadvantage compared with other major financial centers that have embraced digital asset innovation. Supporters of the FCA’s proposal believe the change could strengthen the UK’s position as a leading hub for financial technology and cryptocurrency investment.

If approved, the new rules would expand investment opportunities for retail investors while maintaining safeguards aimed at managing the risks associated with the rapidly growing crypto asset sector.