Image Credit: FCA
Key Takeaways
- The FCA proposed allowing UCITS and certain non-UCITS retail schemes to allocate up to 10% of fund assets to cryptocurrency ETNs under rules set out in its latest quarterly consultation paper.
- The proposal builds on the FCA’s October 2025 decision to lift a ban on retail access to crypto ETNs, which prompted major issuers including BlackRock and WisdomTree to list physically backed products on the London Stock Exchange.
- The consultation paper does not specify a timeline for implementation, and the FCA’s proposal does not address criticism that UK crypto ETP constraints place the country at a disadvantage relative to peers.
The UK’s Financial Conduct Authority has proposed allowing certain retail investment funds to allocate up to 10% of their assets to cryptocurrency exchange-traded notes, according to the regulator’s latest quarterly consultation paper. The proposal covers UCITS and some non-UCITS retail schemes.
FCA Sets Out 10% Limit in Quarterly Consultation Paper
The FCA outlined the proposal in its quarterly consultation paper, specifying that the 10% ceiling would apply to both UCITS schemes and certain non-UCITS retail schemes.
“Our proposed 10% limit for UCITS and NURS would also mitigate the risk of significant impacts arising from crypto ETN exposure,” the regulator wrote.
The consultation paper did not specify a timeline for implementation or finalization of the rule.
UK Regulator First Opened Crypto ETN Access to Retail Investors in October 2025
The proposal builds on a regulatory change the FCA made in October 2025, when it first permitted retail investors to access crypto ETNs. That move lifted a ban on retail access that had been in place since 2021.
Within days of the decision, major issuers including 21Shares, Bitwise, WisdomTree, and BlackRock listed physically backed Bitcoin and Ether products on the London Stock Exchange. In April 2026, UK investors gained tax-free access to crypto ETNs via the Innovative Finance ISA route after HMRC ruled that new purchases could no longer be held inside standard stocks-and-shares ISAs.
The latest consultation paper extends the question of crypto ETN access to regulated fund vehicles rather than individual investors purchasing ETNs directly.
Criticism of UK Crypto ETP Constraints Remains Unaddressed by Proposal
The regulatory constraints around crypto ETN access in the UK have drawn criticism from commentators who have argued the hurdles risk placing the country at a disadvantage relative to its peers. The FCA’s proposal does not address that criticism directly.
John Allan, Director of the Innovation and Operations Unit at the Investment Association, welcomed the move in a statement, saying:
“We welcome this sensible and pragmatic step from the FCA to allow funds to access crypto exposure through regulated ETNs as it supports innovation within a well-understood framework.”
Fund Managers Could Allocate Up to 10% of Assets to Crypto ETNs Under Proposal
UCITS and NURS structures are regulated, open-ended funds that pool capital from retail investors into managed portfolios, making them comparable to US mutual funds in how they are structured and regulated.
Under the FCA’s proposal, fund managers operating those vehicles would be permitted to direct up to one-tenth of fund assets into crypto ETNs, which allow investors to gain exposure to cryptocurrency prices without directly purchasing or taking custody of the underlying digital assets.
