FCA Plans 10% Crypto ETN Cap for Authorized UK Funds

TLDR

• FCA plans 10% Crypto ETN cap for authorized UK funds

• UK funds may gain limited access to regulated Crypto ETNs

  

• FCA keeps direct crypto holdings off limits for UK funds

• Qualified schemes face no cap under FCA’s Crypto ETN plan

• Crypto ETN access widens as UK fund rules shift again

UK fund rules may soon give mainstream portfolios a controlled route into Crypto ETN exposure. The Financial Conduct Authority has proposed a 10% cap for authorized funds. The plan would cover UCITS schemes and most non-UCITS retail schemes.

FCA Sets Crypto ETN Limit for Retail Fund Products

The proposal appears in the FCA’s 52nd quarterly consultation paper. It gives the market five weeks to submit comments before the deadline. The consultation closes on July 13.

The FCA wants authorized funds to hold Crypto ETN products within a clear limit. The regulator set the cap at 10% of scheme property. Fund managers must match every holding with stated objectives and risk profiles.

The cap also protects the mainstream status of these funds. A larger Crypto ETN allocation could change how products sit under UK marketing rules. The FCA wants exposure without forcing funds into restricted investment categories.

Qualified Schemes Face No Cap Under Proposal

Qualified investor schemes would face no Crypto ETN limit under the proposal. These schemes serve professional clients and sophisticated market participants. As a result, the FCA plans a wider route for specialist fund structures.

The proposal excludes long-term asset funds from Crypto ETN holdings. It also excludes non-UCITS retail schemes operating as alternative investment funds. The FCA said crypto exposure does not fit those product objectives.

The regulator also rejected direct crypto holdings for authorized funds. It said funds may only use listed Crypto ETN products for now. Besides, the FCA will review that stance after the incoming crypto asset regime develops.

UK Crypto ETN Market Gains Wider Access

The proposal follows several changes in the UK crypto market. Retail clients gained direct Crypto ETN access after the FCA removed its earlier ban. That decision reopened a market closed for four years.

Major issuers then listed physically backed bitcoin and ether products in London. The group included 21Shares, Bitwise, WisdomTree, and BlackRock.  The UK Crypto ETN market gained larger institutional product coverage.

In April 2026, UK users also gained tax-free Crypto ETN access through Innovative Finance ISAs. HMRC had blocked new purchases inside standard stocks-and-shares ISAs. The latest FCA plan now extends that policy shift into authorized fund structures.

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