Which websites will provide cryptocurrency ETNs?

Crypto ETNs will soon be accessible to investors in the UK once more

We make public the investment platforms that intend to make them available to consumers.

The ban on selling cryptocurrency (crypto) exchange-traded notes (ETNs) to individual investors will be lifted on October 8 by the Financial Conduct Authority (FCA).

Although the interest in cryptocurrency is growing among retail investors, they are frequently compelled to expose themselves through proxy exposure unless they wish to open a wallet on a cryptocurrency exchange and hold cryptocurrencies directly. Crypto stocks like Strategy (NASDAQ:MSTR) (formerly MicroStrategy) have previously emerged as popular choices for do-it-yourself investors.

According to Alex Campbell, head of communications at FreeTrade, "crypto ETNs open the door to more choice and diversification for UK investors." They transform cryptocurrency from a black market to a regulated instrument for constructing robust portfolios. Although the UK still lags behind other major markets in terms of crypto regulations, this change is a positive development.

"Digital assets continue to gain popularity and are increasingly perceived as a component of consumers' financial lives," stated Interactive Investor's head of investment solutions, John Dobson.

According to research from WisdomTree, investors are thinking about using cryptocurrency to fund a vacation, increase pension funds, or even fund a down payment on a home.

Companies that offer cryptocurrency ETNs will be subject to the FCA's explicit Consumer Duty regulations. This implies that any platforms that sell them to individual investors have a responsibility to make sure the goods satisfy the requirements, traits, and goals of their clients and to give them enough information to enable them to make an informed choice.

Some platforms seem to have taken some time to consider that. Although some platforms have informed the BFIA that they plan to provide their customers with crypto ETNs as soon as the ban is lifted, others are adopting a more measured strategy, and still others have no plans to provide the products at all.

Since January 6, 2021, it has been illegal to sell cryptocurrency ETNs to individual investors. Over that period, the price of Bitcoin has risen by more than 250 percent.

Where can I purchase cryptocurrency ETNs?

Note that this is not a comprehensive list of platforms offering crypto ETNs, but these investment platforms informed BFIA that they plan to provide crypto ETNs to their users as soon as they can.

The following platforms have stated that they plan to offer cryptocurrency ETNs soon, though not necessarily right away after the ban is lifted: Fidelity Adviser Solutions (available only to advised clients) FreeTrade Stratiphy.

"In light of the FCA lifting the ban on crypto ETNs for retail investors, we are currently reviewing the regulatory requirements for these products and working on any changes required to offer these to retail clients," Dobson said in reference to Interactive Investors' plans. Fidelity Personal Investing (Fidelity's platform for direct clients).

IG's UK managing director, Michael Healy, stated that the company intends to implement ETNs "over the next couple of months," noting that this is part of its larger crypto strategy and that IG currently provides direct access to cryptocurrency assets.

According to Hargreaves Lansdown, it is evaluating its stance in light of the regulatory shift and will provide clients with an update when it is ready. AJ Bell and eToro also stated that they are now evaluating consumer demand and the usefulness of providing cryptocurrency ETNs via their platforms.

According to Dan Moczulski, UK managing director at eToro, "eToro will not be offering crypto ETNs immediately, even though the FCA is opening retail access to them starting on October 8th." These products have particular responsibilities as Restricted Mass Market Investments (RMMIs), and we think the best course of action is to launch them only in response to significant customer demand.

According to Moczulski, eToro "will be able to roll out ETNs quickly when that decision is made" because it offers RMMI products and already permits users to purchase cryptocurrency.

Some providers, such as Moneybox and BestInvest, informed BFIA that they do not currently have any plans to provide their clients with crypto ETNs.

Can you purchase cryptocurrency ETNs in an ISA?

The ability to hold crypto ETNs in an ISA, as opposed to directly holding crypto, is one of the potential benefits for investors. They would be free from capital gains tax if that were the case.

Although exchange-traded funds (ETFs) and other types of ETNs can be held in an ISA for stocks and shares, it is currently unknown if this will be the case for crypto ETNs.

A spokesperson told BFIA that HMRC expects to confirm the ISA status of crypto ETNs by October 8th, but the agency has not yet made the announcement.

The Crypto ETN: Should You Purchase It?

You shouldn't buy a cryptocurrency ETN just because you can.

Investing in cryptocurrency is risky by nature. Even though well-known cryptocurrencies like Ethereum and Bitcoin have performed well in recent years, they are very volatile in the short term, and less well-known crypto assets can be even more so.

Many investors think that since cryptocurrencies have no inherent value, purchasing them is more of a speculative activity than an investment.

"Before investing any portion of their portfolio in digital assets, retail investors must conduct thorough research and comprehend the associated risks," Dobson stated.

It is also important for investors to understand that the Financial Services Compensation Scheme (FSCS) will not cover losses from crypto ETN investments. In order to sell cryptocurrency ETNs to customers, providers must make sure they satisfy their needs and that they are properly informed about them.