UK Regulator Proposes Allowing Mutual Funds to Hold Up to 10% in Crypto ETNs

The United Kingdom’s financial regulator has proposed a rule change that would allow certain retail investment funds to invest up to 10% of their assets in cryptocurrency exchange-traded notes (ETNs). The move is part of a broader effort to expand regulated access to digital asset investment products while maintaining investor protections.

The proposal applies to UCITS (Undertakings for Collective Investment in Transferable Securities) and selected Non-UCITS Retail Schemes (NURS). These investment structures are widely used by retail investors and operate similarly to mutual funds, pooling money into professionally managed portfolios.

10% Limit Designed to Reduce Risk

According to the proposal, the 10% cap is intended to limit the impact that crypto market volatility could have on retail investment funds. By restricting exposure, regulators aim to provide access to digital assets without allowing cryptocurrency holdings to dominate fund portfolios.

The proposal was included in the regulator’s latest quarterly consultation paper and represents another step in the gradual integration of digital assets into mainstream financial markets.

Crypto ETN Market Continues to Expand

The latest proposal follows an important regulatory shift in October 2025, when retail investors were once again allowed to access crypto ETNs after a ban that had been in place since 2021 was lifted.

Crypto exchange traded products have become a popular way for investors to gain exposure to cryptocurrencies without directly buying, storing or managing digital assets themselves. Supporters argue that expanding access to these products could help the UK remain competitive with other major financial markets that have adopted more crypto-friendly investment frameworks.

Industry Watches Regulatory Decision

The proposal is now expected to attract close attention from fund managers, crypto firms and investors, as it could further strengthen the role of regulated digital asset products within the UK’s investment landscape.