UK FCA proposal would let authorized funds allocate up to 10% to crypto ETNs

The UK’s financial watchdog just nudged crypto exposure through a new regulatory door.

According to The Block, the UK Financial Conduct Authority (FCA) proposed allowing authorized UK funds to allocate up to 10% of their assets to crypto exchange-traded notes (ETNs). The proposal extends access that the FCA began opening up after it lifted a retail ban last year.

What the FCA proposal changes

The core shift is simple. Under the proposal reported by The Block, authorized funds would get permission to hold a capped position in crypto ETNs.

That matters because it turns crypto from a retail-facing story into a portfolio policy question. For fund managers, the relevant constraint becomes compliance with FCA rules, not whether a product can be sold to retail investors.

Why the “authorized funds” wording matters

The Block frames the change as applying to “authorized UK funds,” which implies eligibility and oversight through existing fund authorization and governance structures.

In practice, that usually means fewer shortcuts for managers. They cannot treat this like a free-for-all crypto allocation. They still have to operate within FCA expectations for asset eligibility, risk controls, and disclosure. Even a small cap like 10% can be meaningful, but it is also a boundary the FCA is explicitly setting.

The context: retail ban lift, now ETNs

The Block ties the proposal to last year’s retail ban lift. That earlier move widened the set of crypto-linked products available to retail investors.

This latest FCA step looks like a second-stage expansion. Instead of only expanding retail access, the FCA would broaden where institutional-style vehicles can place capital, via crypto ETNs.

What to watch next

The Block’s report is focused on the FCA’s proposed direction, not on final approval. The key reader task is to monitor how this proposal lands in the final rulemaking timeline and what the FCA requires funds to do to qualify.

Because the cap is defined, the debate will likely shift to implementation details. Will the FCA limit which ETNs count. How will funds handle custody, valuation, liquidity, and issuer risk. And how will they report exposure so investors can see what’s actually inside the allocation.

For now, the direction is clear. The FCA is carving out a controlled path for crypto ETNs inside regulated UK funds, with a hard ceiling of 10% as reported by The Block.