According to CoinTelegraph on June 9, the UK Financial Conduct Authority (FCA) proposed in a quarterly consultation paper to allow certain authorised investment funds—including transferable securities collective investment schemes (UCITS) funds and some non-UCITS funds—to hold up to 10% of cryptocurrency exchange-traded notes (ETNs). The public consultation will run for 5 weeks, with a deadline of July 13.
Confirmed Terms of the FCA Proposal: Scope, Exclusion Mechanisms, and Policy Background
Based on the FCA consultation paper’s confirmation details: the proposal applies to UCITS funds and some non-UCITS funds; the 10% cap applies to holdings of crypto ETNs, while eligible investor schemes (QIS) without an investment cap may invest in “more speculative assets” without a position limit. However, these funds cannot be sold or promoted to retail investors.
The FCA also proposed whether funds that primarily hold “long-term assets” (such as real estate) and some other retail funds should be excluded from the scope of holdings of crypto ETNs, which is also included in the consultation. The reason is that the FCA believes cryptocurrencies may not align with the investment objectives of these funds.
This proposal aims to standardise the regulatory pathway for retail access to crypto investments in the UK. The FCA lifted the ban on retail investors directly trading crypto ETNs in August 2025, and this proposal is intended to further align retail fund pipeline rules with direct trading rules.
Wider UK Crypto Regulatory Background
According to public reporting, the UK FCA and the Bank of England are currently consulting on multiple crypto regulatory issues: proposed rules for stablecoin issuance, custody and staking of cryptocurrencies. Last month, the Bank of England said it is reconsidering parts of its proposed stablecoin regime; previously, crypto companies warned that holding limits and reserve requirements could hinder stablecoin adoption.
In April 2026, the FCA set new rules for tokenised funds, and sought feedback on guidance relating to stablecoin issuance, cryptoasset trading, custody, and staking.
FAQ
Is the FCA’s 10% limit for crypto assets overall, or only for crypto ETNs?
According to the FCA consultation paper, the proposed 10% limit is clearly targeted at “cryptocurrency exchange-traded notes (ETNs),” rather than restricting the broader category of crypto assets. In this proposal, the FCA did not introduce specific retail fund allocation rules for other forms of crypto exposure (such as direct holding of cryptocurrencies).
What specific conditions must a UCITS fund meet to hold crypto ETNs?
Under the FCA’s proposal, key conditions include: the investment must align with the fund’s disclosed investment objectives and risk profile; holdings must not exceed 10% of total assets; the FCA is not supportive of “large investments” in cryptocurrencies, with 10% characterised as a “conservative restriction.” Specific implementation details still need to wait for the final rules to be confirmed after the consultation period ends.
After the 5-week consultation ends, what are the FCA’s next steps?
The FCA’s public consultation ends on July 13, 2026. After the consultation period concludes, the FCA will review feedback and determine the final rules. The FCA did not publish a projected effective date for the final rules in this consultation paper.
