The UK's Financial Conduct Authority (FCA) has proposed allowing UCITS and non-UCITS retail schemes to hold crypto exchange-traded notes (ETNs), subject to a 10% cap at the scheme-property level. The move, announced Tuesday, marks the first time retail investment funds in Britain could include crypto-linked products — but direct holdings of Bitcoin, Ether, or other cryptoassets for investment purposes remain excluded. Industry feedback is due by July 13, 2026.
10% cap at the fund level
The cap applies to the total property of the fund, not per investor. Up to 10% of a fund's holdings could consist of cryptoasset ETNs. The proposal covers both UCITS and non-UCITS retail schemes, though direct crypto holdings stay banned. The FCA says the cap is meant to limit concentration risk while giving fund managers flexibility.
Exemptions and prohibitions
Qualified investor schemes are outside the proposed retail-fund cap — they can hold more if their rules allow. But long-term asset funds (LTAFs) and non-UCITS retail schemes (NURS) operating as funds of alternative investment funds (FAIFs) face a proposed outright ban on crypto ETN holdings. Retail consumers already gained access to crypto ETNs as standalone exchange products on UK recognized exchanges back in October 2025.
What fund managers must do
The FCA requires fund managers to have adequate knowledge and due diligence of cryptoassets and crypto ETNs. They must also monitor compliance with fund objectives, liquidity, and risk limits. The products sit outside the Financial Services Compensation Scheme (FSCS) — so no government-backed safety net for losses. The existing ban on retail cryptoasset derivatives remains in place.
Deadline for industry feedback
Comments on the fund chapter are due July 13, 2026. The FCA will then consider responses before finalizing rules. For now, the proposal is a cautious step — opening a narrow path for regulated funds to dip into crypto, but keeping tight guardrails.
