The UK Financial Conduct Authority proposed on June 9 to permit UK-authorized mutual funds to hold up to 10% of net assets in crypto exchange-traded notes, a significant shift from the prior effective prohibition. The move aligns the UK with a broader global regulatory trend toward allowing regulated fund vehicles limited crypto exposure.
For Armada's crypto repo desk, UK-domiciled asset managers and fund vehicles that begin accumulating crypto ETN positions under this rule represent a potential new counterparty segment. These entities may seek to optimize yield on BTC or ETH ETN holdings via repo, creating demand for Armada's collateral financing product, particularly given the no-rehypothecation and Fireblocks custody assurances that regulated fund managers would require.