The UK Financial Conduct Authority is proposing a calibrated path for authorized investment funds to hold limited exposure to crypto, opening the door for some UCITS and select non-UCITS funds to allocate up to 10% of their assets to crypto exchange-traded notes (ETNs). The move aims to close a regulatory gap between retail investors and funds while preserving protections and market integrity.

The proposal appears in the FCA’s quarterly consultation paper, part of a broader effort to align retail access to crypto with international practice. It follows the regulator’s August decision to lift the ban on retail trading of crypto ETNs, signaling a step toward a more consistent, market-conforming framework for crypto products offered to…