The UK’s Financial Conduct Authority wants to let regular investment funds hold a slice of crypto — up to 10% in exchange-traded notes — bringing retail investors closer to the kind of exposure that’s been available to institutions for years.
The proposal, floated in a quarterly consultation paper on Friday, would apply to UCITS funds and certain non-UCITS funds marketed to retail consumers. It’s a notable shift for a regulator that’s been cautious about letting everyday investors touch crypto.
What the FCA is actually proposing
The 10% cap is deliberately conservative. The FCA said it doesn’t think retail-focused funds should have “significant exposure” to crypto products, “given the speculative nature of the underlying cryptoassets.” But it also wants authorized funds to “remain contemporary and consistent with the demands of investors.”
Funds that want to include crypto ETNs would need to show the investment fits their disclosed objectives and risk profile. The rules wouldn’t apply to unregulated or qualified investor schemes, which can already hold more speculative assets — but those can’t be sold to retail investors anyway.
The FCA is also asking whether funds focused on “long-term assets” like property should be barred from holding crypto ETNs entirely, arguing that crypto doesn’t align with those funds’ investment goals.
Why now
This didn’t come out of nowhere. The FCA lifted its ban on retail investors trading crypto ETNs in August, part of a broader push to align the UK’s crypto access with other markets. The consultation on this latest proposal runs for five weeks, closing July 13.
It’s part of a wider UK crypto overhaul. The FCA and Bank of England have been consulting on stablecoin rules, crypto custody, and staking. The BoE recently signaled a softer approach to stablecoin regulation after industry pushback on holding caps and reserve requirements. In April, the FCA also cleared the path for tokenized funds and sought feedback on guidance for stablecoin issuance and crypto trading.
What it means
If this goes through, it’s a quiet but meaningful legitimization. A 10% allocation cap isn’t going to move Bitcoin’s price on its own, but it signals that the UK’s top financial regulator is comfortable letting retail investors get indirect crypto exposure through regulated, familiar vehicles. That’s a different posture than outright bans or heavy restrictions.
The consultation period will be worth watching. If the final rules land close to what’s proposed, expect UK fund managers to start rolling out crypto-adjacent products aimed at retail investors — something that’s been largely off-limits until now.
