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UK FCA proposes allowing authorized funds to allocate up to 10% to crypto ETNs

UK FCA proposes allowing authorized funds to allocate up to 10% to crypto ETNs

The FCA’s Q52 consultation would let eligible authorized funds buy listed crypto ETNs within a 10% cap, while keeping direct crypto ownership banned and excluding long-term asset funds and certain alternative structures.

Fact Check
The FCA's own CP26/17 page explicitly states the proposal to allow certain authorised funds to hold cETNs up to 10% of scheme property. The Block's article elaborates that eligible funds include UCITS and most non-UCITS retail schemes and that direct crypto holdings remain prohibited, matching the claim verbatim.
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Summary

The UK Financial Conduct Authority has proposed letting eligible authorized funds, including UCITS and most non-UCITS retail schemes, invest up to 10% of their assets in crypto exchange-traded notes listed on recognized UK exchanges, with some EU and other global products also eligible if they meet existing market criteria. Fund managers would need to show the positions fit a fund’s investment objective and risk profile. Some schemes serving professional investors and individuals with a high net worth would face no cap, while long-term asset funds and non-UCITS retail schemes structured as alternative investment funds would remain excluded. Direct crypto holdings would stay banned, though the FCA said it could revisit that stance after broader crypto and client-asset protection rules are in place. The 10% ceiling is meant to limit risk and avoid pushing mainstream funds into “restricted mass market investment” territory. Responses to consultation paper Q52 are due by July 13, and the proposal would close a gap that opened after UK retail investors regained access to crypto ETNs in 2025.

Terms & Concepts
  • crypto ETNs: Exchange-traded notes that give investors exposure to the price of crypto assets.
  • UCITS: A category of regulated investment funds that can be marketed broadly across Europe under common rules.
  • authorized funds: Investment funds permitted to operate under the UK's regulated fund framework.