{"id":24126,"date":"2026-06-09T14:33:57","date_gmt":"2026-06-09T14:33:57","guid":{"rendered":"https:\/\/nft.runfyers.com\/index.php\/2026\/06\/09\/uk-regulator-proposes-allowing-investment-funds-to-hold-crypto-etns-for-the-first-time-nft-plazas\/"},"modified":"2026-06-09T14:33:57","modified_gmt":"2026-06-09T14:33:57","slug":"uk-regulator-proposes-allowing-investment-funds-to-hold-crypto-etns-for-the-first-time-nft-plazas","status":"publish","type":"post","link":"https:\/\/nft.runfyers.com\/index.php\/2026\/06\/09\/uk-regulator-proposes-allowing-investment-funds-to-hold-crypto-etns-for-the-first-time-nft-plazas\/","title":{"rendered":"UK Regulator Proposes Allowing Investment Funds to Hold Crypto ETNs for the First Time – NFT Plazas"},"content":{"rendered":"

<\/p>\n

\n

The Financial Conduct Authority\u2019s landmark proposal would open a regulated pathway for mainstream UK funds to gain crypto exposure \u2014 but with strict limits attached<\/b><\/p>\n

The United Kingdom\u2019s financial watchdog has proposed a significant shift in its approach to cryptocurrency investing, one that could bring digital asset exposure into mainstream investment funds for the first time.<\/span><\/p>\n

The Financial Conduct Authority (FCA) has put forward plans to allow authorized investment funds \u2014 including widely used UCITS schemes and most non-UCITS retail schemes \u2014 to allocate up to 10% of their portfolios to crypto exchange-traded notes (ETNs). The proposal, published as part of the FCA\u2019s 52nd quarterly consultation paper, is open for public comment until July 13.<\/span><\/p>\n

What Are Crypto ETNs and Why Does This Matter?<\/span><\/h2>\n

Crypto exchange-traded notes<\/span><\/a> are financial instruments listed and traded on regulated stock exchanges that track the price of a cryptocurrency \u2014 most commonly Bitcoin or Ethereum \u2014 without requiring investors to hold the digital asset directly. Think of them as a regulated, exchange-listed wrapper around a crypto investment.<\/span><\/p>\n

Until recently, UK retail investors couldn\u2019t access these products at all. The FCA only lifted a four-year prohibition on selling crypto ETNs to individual retail investors in August 2025, a move framed as part of a broader effort to support UK growth and competitiveness.<\/span><\/p>\n

But even after that change, there was a notable gap in the rules: authorized investment funds \u2014 the professionally managed pools of capital that millions of ordinary savers use \u2014 were still effectively barred from holding them. The new proposal is designed to close that gap.<\/span><\/p>\n

Pros and Cons of Exchange-Traded Notes (ETNs) (Source: Coinpedia)<\/span><\/i><\/p>\n

What Exactly Is Being Proposed?<\/span><\/h2>\n

UCITS funds and most non-UCITS retail schemes<\/b> would be permitted to hold crypto ETNs, but only up to a 10% ceiling of the fund\u2019s total assets. The regulator has been deliberate about this cap. Allowing material exposure beyond that threshold could trigger a reclassification of funds as \u201crestricted mass-market investments,\u201d which would complicate their standing as standard retail products.<\/span><\/p>\n

Qualified investor schemes (QIS)<\/b> \u2014 funds limited to professional and sophisticated investors \u2014 would face no such ceiling under the proposal, reflecting the assumption that experienced investors are better equipped to manage higher levels of risk.<\/span><\/p>\n

Long-term asset funds (LTAFs) and non-UCITS retail schemes operating as alternative investment funds<\/b> would be excluded from holding crypto ETNs entirely. The FCA said it does not view cryptocurrencies as consistent with the investment objectives of these particular structures.<\/span><\/p>\n

Fund managers would also be required to demonstrate that any crypto ETN holdings align with a fund\u2019s disclosed investment objectives and risk profile. Any exposure beyond a minimal, token amount would need to be disclosed as a material feature of the fund\u2019s strategy.<\/span><\/p>\n

The Regulatory Logic Behind the 10% Limit<\/span><\/h2>\n

The FCA has been careful to frame this as a measured step, not an endorsement of crypto as a mainstream asset class. In the consultation paper, the regulator stated plainly that it does not believe it would be appropriate to allow funds significant exposure to crypto ETNs \u201cgiven the speculative nature of the underlying crypto assets.\u201d<\/span><\/p>\n

Contrast that with Ireland\u2019s Central Bank, which oversees Europe\u2019s largest ETF domicile and has taken a notably more cautious position. A senior official recently acknowledged the regulator is \u201cwatching the area with interest\u201d but said there is \u201cnot sufficient merit in a rule change at the moment.\u201d<\/span><\/p>\n

Industry Reaction<\/span><\/h2>\n

The investment industry has broadly welcomed the FCA\u2019s move. The Investment Association, the UK\u2019s main asset management trade body, offered support for the proposal.<\/span><\/p>\n

John Allan, Director of the Innovation and Operations Unit, called it \u201ca sensible and pragmatic step\u201d that would allow funds to access crypto exposure through regulated ETNs \u201cwithin a well-understood framework.\u201d He argued that the listed, regulated structure of ETNs provides greater transparency than unregulated alternatives, and that the 10% threshold keeps risks appropriately managed.<\/span><\/p>\n

What the FCA Is Not Proposing<\/span><\/h2>\n

It is worth being clear about what this proposal does not include. The FCA explicitly stated it is not currently considering allowing authorized funds to hold crypto assets \u2014 such as Bitcoin itself \u2014 directly. That question remains on hold at least until the regulator has assessed the impact of the incoming broader crypto asset regulatory regime on fund structures, including rules around how client assets are safeguarded.<\/span><\/p>\n

Background and Timeline<\/span><\/h2>\n

The proposal builds on a string of incremental steps the FCA has taken to integrate crypto into the regulated financial system. Major issuers including BlackRock, 21Shares, Bitwise, and WisdomTree listed physically backed Bitcoin and Ethereum products on the London Stock Exchange shortly after the retail ban was lifted in October 2025. In April 2026, UK investors also gained the ability to hold crypto ETNs inside the tax-efficient Innovative Finance ISA wrapper.<\/span><\/p>\n

The consultation period on the latest fund allocation proposal closes on July 13, 2026.<\/span><\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

The Financial Conduct Authority\u2019s landmark proposal would open a regulated pathway for mainstream UK funds to gain crypto exposure \u2014 but with strict limits attached The United Kingdom\u2019s financial watchdog has proposed a significant shift in its approach to cryptocurrency investing, one that could bring digital asset exposure into mainstream investment funds for the first […]<\/p>\n","protected":false},"author":1,"featured_media":24127,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true},"categories":[16],"tags":[],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/nftplazas.com\/wp-content\/uploads\/2026\/06\/1-1-14.jpg","jetpack_sharing_enabled":true,"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/24126"}],"collection":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/comments?post=24126"}],"version-history":[{"count":0,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/posts\/24126\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media\/24127"}],"wp:attachment":[{"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/media?parent=24126"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/categories?post=24126"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nft.runfyers.com\/index.php\/wp-json\/wp\/v2\/tags?post=24126"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

The 10% figure is also notable in an international context. Luxembourg\u2019s financial regulator, the <\/span>CSSF<\/span><\/a>, made a similar move in February 2026 \u2014 also setting a 10% indirect crypto exposure limit for UCITS funds. That decision was partly driven by the recognition that retail investors already have direct access to digital assets, and that demand from fund managers was building. Although no crypto-exposed ETFs have yet launched in Luxembourg on the back of the rule change, several asset managers are reported to be exploring how to incorporate the asset class.<\/span><\/p>\n

Under the <\/span>FCA\u2019s plan<\/span><\/a>:<\/span><\/p>\n