What is the UK FCA proposing for crypto investment funds?

The UK Financial Conduct Authority (FCA) has proposed allowing certain retail-focused investment funds to allocate up to 10% of their assets to crypto exchange-traded notes (ETNs). The proposal would give regulated funds limited exposure to crypto while maintaining restrictions designed to protect retail investors.

Why does the FCA want to allow retail funds to invest in crypto ETNs?

The FCA said it wants authorised funds to remain relevant to investor demand while ensuring markets function properly and consumers are protected. The proposal also aims to reduce inconsistencies after UK retail investors were already allowed to buy crypto ETNs directly.

What are crypto exchange-traded notes (ETNs)?

Crypto ETNs are exchange-traded products that track the performance of cryptocurrencies without requiring investors to directly own the underlying digital assets. They provide exposure to crypto price movements through a regulated investment vehicle.

Which UK investment funds could gain crypto exposure under the FCA proposal?

The proposal would apply to UCITS funds and some non-UCITS retail schemes. These funds would be able to invest in crypto ETNs provided the exposure remains within the proposed 10% limit and aligns with the fund's stated objectives and risk profile.

Why is the FCA limiting crypto exposure to 10%?

The FCA described the 10% cap as a conservative restriction because cryptocurrencies remain highly volatile and speculative assets. The regulator believes some exposure may be appropriate, but significant allocations could create excessive risk for retail investors.

Is the FCA allowing unlimited crypto exposure for any funds?

Yes, some unregulated and qualified investor schemes could continue investing in crypto without a specific cap. However, these products cannot be marketed or sold to retail investors, meaning they are generally limited to professional or sophisticated investors.

Is this proposal bullish for the UK crypto industry?

It could be viewed as a positive development because it would expand the number of regulated investment products able to access crypto markets. Greater institutional participation could support demand for crypto-linked products, although the proposed limits remain relatively cautious.

Image for illustrative purposes only. Not a real photo.

FCA weighs 10% crypto limit for retail funds

Written by Jon CuthbertPublished Jun 9, 2026, 5:20 AM

The UK’s Financial Conduct Authority has proposed allowing certain retail-focused investment funds to hold up to 10% of their assets in crypto exchange-traded notes, marking a significant step towards integrating digital assets into mainstream investment products.

The proposal, outlined in the regulator’s latest quarterly consultation paper, would permit undertakings for collective investment in transferable securities (UCITS) funds and some non-UCITS funds to gain limited exposure to crypto products.

The FCA said it wanted authorised funds to “remain contemporary and consistent with the demands of investors” while ensuring consumers “are adequately protected and markets function well.”

The regulator said the proposed 10% cap would impose “conservative restrictions” on crypto exposure while allowing eligible funds to be marketed to retail investors, reflecting concerns about the speculative nature of digital assets.

Funds seeking crypto exposure would need to demonstrate that such investments are consistent with their disclosed objectives and risk profiles, while unregulated and qualified investor schemes would remain free to invest without limits because they cannot be marketed to retail investors.

The FCA is also seeking feedback on whether long-term asset funds and other retail-focused vehicles should be prohibited from holding crypto ETNs, arguing that digital assets may not align with the investment objectives of those products.

The five-week consultation runs until July 13 and comes as the UK advances broader crypto reforms, with the FCA and the Bank of England consulting on rules covering stablecoins, custody and staking, while recent proposals have sought to support tokenised funds and clarify requirements for crypto market participants.