The UK’s Financial Conduct Authority has proposed a 10% limit on crypto exchange-traded note (ETN) exposure for authorized retail funds. This measure, outlined in a quarterly consultation paper, targets UCITS and most non-UCITS retail schemes while exempting professional investor funds. Fund managers must justify how crypto ETN holdings align with a fund’s objectives and disclose material exposures.
UK regulators have proposed a limited path for authorized funds to invest in crypto ETNs. The Financial Conduct Authority set a 10% ceiling in its latest quarterly consultation paper, covering UCITS and most non-UCITS retail schemes.
The proposal has a five-week comment window ending on July 13. This measure addresses a gap in the UK market following the 2025 lift of a retail ban on crypto ETNs.
The FCA stated the 10% limit is intentional to prevent treating the asset class as a mainstream mass-market investment. Qualified investor schemes for professional clients face no cap, while long-term asset funds remain excluded.
The regulator said excluded fund structures have investment objectives not resembling cryptocurrencies. This distinction separates products for sophisticated investors from those widely available to retail customers.
The FCA’s plan was supported by The Investment Association. Its Innovation and Operations Unit Director John Allan described the proposal as sensible and pragmatic.
“Regulated ETNs can play a supporting role in innovation within a familiar structure,” said Allan. He added that a listed product provides a clearer investor pathway than unregulated offerings.
The proposal allows securities stored in funds to be traded on UK-recognized or eligible EU and global markets. Fund managers must demonstrate holdings fit a fund’s expressed purpose and risk profile.
The FCA stated any non-de-minimis crypto ETN exposure is considered material and must be disclosed. This follows previous industry queries about authorized fund access raised during a 2025 consultation.
Major issuers including 21Shares, Bitwise, WisdomTree, and BlackRock listed physically backed Bitcoin and Ethereum products on the London Stock Exchange after the retail ban was lifted. UK investors gained tax-free access to crypto ETNs through Innovative Finance ISAs in April 2026 following an HMRC ruling.
