FCA to allow UCITS and certain NURS schemes to hold up to 10% of scheme property in cETNs

The FCA’s proposal

In its Quarterly Consultation No 52 (CP26/17), the Financial Conduct Authority (FCA) has proposed amending COLL to allow undertakings for collective investment in transferable securities (UCITS) and certain non-UCITS retail schemes (NURS) to hold cryptoasset-backed exchange traded notes (cETNs) where such holdings align with the investment objectives and the risk profile of the authorised fund.

A cETN is a debt security that provides exposure to one or more underlying cryptoassets by tracking their performance. The FCA banned the sale of cETNs to retail investors in January 2021, a ban that it subsequently lifted in October 2025. The FCA has separately maintained an effective prohibition on the holding of cETNs by authorised funds, but its position on this now appears to have changed following developments in the cryptoasset regulatory space.

The FCA is proposing limiting UCITS’ and NURS’ exposure to cETNs to 10% of scheme property, citing their ‘speculative nature’. Direct investment by UCITS and NURS in such assets will remain prohibited, with the regulator confirming that this rule will remain in place at least until the incoming cryptoasset regulatory regime has taken effect and the FCA has further considered its impact on authorised funds. 

The FCA is also seeking views on whether to exclude long-term asset funds (LTAFs) and funds of alternative investment funds (FAIFs) from the changes, on the basis that crypto is inconsistent with such funds’ investment objectives. Qualified Investor Schemes (QIS) will not be subject to any limit on cETN investments. 

These proposed changes represent a significant step in bringing cryptocurrency-linked exposure within mainstream UK retail fund structures. 

Next steps for authorised funds 

Providers of UCITS and NURS wishing to provide cETN exposure to investors will need to seek FCA approval for the necessary amendments to their funds’ investment objectives and risk profile to permit this. Consideration will also be required as to the risks that cETN exposure would present, and appropriate amendments made to the prospectus risk disclosures, and potentially to marketing materials, to capture these. 

The FCA’s proposal is being consulted on over a 5-week period closing on 13 July 2026. Responses to the FCA’s consultation on this proposal can be provided via this link.

For more information, or to discuss investment in cETNs, please reach out to Karagh Gilliatt, Aidan Campbell, Laura Houët, Jamie Marshall or your usual CMS contact.