FCA Proposes 10% Crypto ETN Limit for UK Retail Funds

The Financial Conduct Authority (FCA) has proposed allowing UK retail funds to hold cryptocurrency exchange-traded notes (ETNs) as part of their portfolios, but with a limit. The regulator set a 10% ceiling on how much of a fund's assets could be allocated to crypto ETNs.

This proposal applies to two types of regulated fund structures: Undertakings for Collective Investment in Transferable Securities (UCITS) schemes and a subset of non-UCITS retail schemes (NURS). The FCA stated that the proposed cap is intended to limit the financial risk that crypto ETN exposure could introduce into these fund structures.

The FCA did not specify a timeline for when the consultation will close or when any final rule might be implemented. This proposal remains subject to public feedback before it can be adopted.