UK FCA proposes allowing authorized funds to allocate up to 10% to crypto ETNs
The FCA proposed allowing authorized UK funds to hold up to 10% in crypto ETNs, extending access opened by last year's retail ban lift.
The UK's Financial Conduct Authority (FCA) has proposed new regulations that would allow authorized funds to allocate up to 10% of their portfolios to cryptocurrency exchange-traded notes (ETNs). The proposal represents a significant expansion of crypto investment options for institutional funds operating under FCA authorization.
This development builds on the regulator's decision last year to lift its retail ban on crypto derivatives trading. The previous restrictions had limited UK investors' access to cryptocurrency investment products, but the FCA has gradually been opening doors for regulated crypto exposure. The proposed 10% allocation limit suggests a cautious but progressive approach to integrating digital assets into traditional investment frameworks.
The move could substantially increase institutional demand for crypto ETNs in the UK market, potentially driving greater liquidity and legitimacy for these investment vehicles. Fund managers would gain the ability to offer clients diversified portfolios that include regulated crypto exposure, marking a notable shift in the UK's regulatory stance toward digital assets. This proposal aligns with broader European trends of increasing crypto integration into traditional financial products.
Market participants will be watching closely for the timeline of implementation and any additional regulatory requirements that may accompany the new rules. The FCA's consultation period and final decision could influence similar regulatory approaches across other major financial jurisdictions.
Source: The Block
