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The United Kingdom's (U.K.) financial markets regulator is proposing to allow certain investment funds to hold up to 10% of their assets in cryptocurrencies.

The U.K. Financial Conduct Authority’s proposal covers the British version of mutual funds, i.e. open-ended investment funds that pool capital from retail investors into managed portfolios.

The regulator said that capping exposure to cryptocurrencies such as Bitcoin (CRYPTO: $BTC) at 10% will help mitigate the risks of significant impacts arising from exposure to digital assets.

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Analysts said the U.K. proposal is another step towards wider acceptance of cryptocurrency investment products.

Investment vehicles that allow users to gain exposure to cryptocurrencies without having to buy and hold the digital assets themselves have been at the forefront of mainstream adoption.

In the U.S., the first Bitcoin exchange-traded fund (ETF) was approved in January 2024. Since then, about a dozen ETFs have cropped up that track the spot price of BTC.

Bitcoin is trading at $61,600 U.S. on the afternoon of June 9.