UK mutual funds may soon be allowed to hold crypto ETNs, but only with a 10% leash
The FCA is consulting on a rule that would let UK UCITS and most non-UCITS retail schemes hold crypto exchange-traded notes, capped at 10% of scheme property. This would bring crypto exposure into regulated retail funds, but only through listed ETNs, not direct holdings of Bitcoin, Ether, or other cryptoassets. The permission would be limited to funds whose objectives and risk profiles justify it, with managers expected to assess liquidity, due diligence, disclosure, and portfolio fit. The proposal excludes qualified investor schemes from the retail limit and would prohibit crypto ETN holdings in certain long-term asset funds and NURS fund-of-funds. It builds on the FCA’s 2025 decision to allow retail access to crypto ETNs on UK exchanges, while keeping them high-risk and outside FSCS protection. If adopted, the rule could allow small, disclosed crypto allocations in mainstream funds, though many managers may avoid using it because of governance, liquidity, and reputational concerns.
