TLDRThe FCA proposed allowing UCITS and certain NURS funds to invest up to 10% in crypto ETNs.Under the consultation paper, the regulator set a 10% cap to manage portfolio concentration risks.The proposal follows the October 2025 decision that reopened retail access to crypto exchange-traded products.UCITS and NURS operate as regulated, open-ended retail investment structures in the U.K.The FCA invited industry feedback before finalizing amendments to existing fund rules.The U.K. Financial Conduct Authority has proposed allowing certain retail funds to invest up to 10% in crypto exchange-traded notes. The plan covers UCITS schemes and some non-UCITS retail schemes under existing investment rules. The regulator outlined the proposal in its latest quarterly consultation paper and invited feedback from market participants.FCA Outlines Framework for Retail Fund ExposureThe Financial Conduct Authority detailed the proposal in its quarterly consultation document. It said UCITS schemes and certain non-UCITS retail schemes could allocate up to 10% to crypto ETNs. The regulator stated that the cap would limit concentration within diversified portfolios.The FCA wrote, “Our proposed 10% limit for UCITS and NURS would also mitigate the risk of impacts arising from crypto ETN exposure.”It explained that the limit aligns with current diversification standards for retail funds. The proposal applies to regulated open-ended structures available to retail investors.UCITS stands for Undertakings for Collective Investment in Transferable Securities. These funds pool money from retail investors into managed portfolios under strict oversight. Non-UCITS retail schemes operate under similar rules but follow a separate regulatory framework.The FCA confirmed that the proposal does not change broader eligibility rules for retail funds. Instead, it would permit limited exposure to crypto ETNs within existing structures. The consultation paper sets out technical amendments to reflect the allocation threshold.The regulator requested comments from industry participants before finalizing the rules. It said it would review feedback before publishing any final amendments. The consultation forms part of its regular policy update process.Crypto ETNs Gain Further Access in U.K. MarketThe proposal builds on earlier regulatory changes affecting crypto ETNs. In October 2025, the FCA lifted a ban that had restricted retail access since 2021. That move allowed retail investors to access certain crypto exchange-traded products.Crypto ETNs allow investors to gain price exposure without directly holding digital assets. Fund managers purchase listed notes that track cryptocurrency performance. Investors therefore avoid direct custody and operational requirements.The FCA’s consultation does not expand direct crypto holdings for retail funds. Instead, it focuses on exchange-traded notes listed on approved venues. The regulator maintains oversight of listing and disclosure standards for these instruments.The U.K. regulator has previously faced criticism over its cautious approach. Some commentators argued that restrictions limited domestic competitiveness. The latest proposal addresses portfolio allocation rather than broader market access.The FCA published the consultation as part of its standard quarterly review cycle. It invited responses within the stated deadline in the document. The authority will publish further updates after reviewing submitted feedback.The post UK FCA Proposes 10% Retail Fund Allocation to Crypto ETNs appeared first on Blockonomi.