UK financial regulator moves to allow mutual funds 10% exposure to crypto ETNs

The Financial Conduct Authority proposed allowing some investment schemes to add exposure to crypto exchange-traded notes.

What to know:

• The U.K.'s Financial Conduct Authority (FCA) proposed allowing certain retail investment funds to hold up to 10% of their assets in cryptocurrency exchange-traded notes.
• UCITS and NURS could be described as U.K. equivalents of mutual funds in that they are regulated, open-ended structures that pool money from retail investors into managed portfolios.
• The regulatory hurdles to wider access to crypto ETNs has drawn criticism from commentators who say it risks placing the U.K. at a disadvantage to its peers.

The U.K.'s financial regulator, the Financial Conduct Authority (FCA), proposed allowing certain retail investment funds to hold up to 10% of their assets in cryptocurrency exchange-traded notes (ETNs).

The financial regulator made the suggestion for UCITS ("Undertakings for Collective Investment in Transferable Securities") schemes and some non-UCITS retail schemes (NURS) to invest in crypto ETNs in its latest quarterly consultation paper.

UCITS and NURS are similar to mutual funds in the U.S. in that they are regulated, open-ended structures that pool money from retail investors into managed portfolios.

"Our proposed 10% limit for UCITS and NURS would also mitigate the risk of significant impacts arising from crypto ETN exposure," the FCA wrote.

The FCA's proposal marks another step on the road to wider acceptance of crypto exchange-traded products (ETPs) in the U.K. under the ETN banner. The regulator first allowed retail investors to access such funds in October 2025, lifting a ban that had been in place since 2021.

Investment vehicles that allow users to gain exposure to cryptocurrency without having to buy and custody the assets themselves have been at the forefront of mainstream adoption of crypto for several years. The regulatory hurdles to their wider use in the U.K. have drawn criticism from commentators who say it risks placing the country at a disadvantage compared to its peers.

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