The proposal is part of FCA’s fifty-second quarterly consultation, with a five-week feedback window that ends on July 13.

Certain funds would be excluded from holding crypto ETNs, such as long-term asset funds and non-UCITS retail schemes structured as alternative investment funds, and direct crypto ownership by funds would still not be permitted.

The UK Financial Conduct Authority has proposed allowing investment funds to allocate up to 10% of assets to crypto exchange traded notes (ETNs) to give regulated funds regulated exposure to crypto.

If approved, funds would need to update investment mandates and risk disclosures before allocating to crypto ETNs.

Industry reaction has been broadly positive for regulatory clarity, though consumer groups worry about the suitability of crypto exposure for retail investors even within caps.

Industry groups broadly support a clear regulatory framework, while consumer advocates warn about suitability for retail investors.

The market context shows increased UK crypto product availability, with providers like 21Shares, Bitwise, WisdomTree, and BlackRock listing physically-backed Bitcoin and Ether ETNs in London, expanding the ecosystem.

The consultation period runs until early 2025, with final rules expected later in the year, and potential adoption could influence asset managers, crypto exchanges, and regulators elsewhere.

Robust risk management is central to the proposal, including mandatory disclosure of crypto exposure and volatility warnings for funds.

The FCA has previously lifted its retail ban on crypto ETNs in October 2025, enabling listed physically backed Bitcoin and Ether products and, more recently, crypto ETNs within Innovative Finance ISAs in April 2026.

The plan aligns with similar moves in Europe, where countries like Germany, Switzerland, and the Netherlands have permitted comparable products.

The move aligns the UK with European peers, as regulators in Germany, Switzerland, and the Netherlands have already allowed similar ETN products for investment funds.