Crypto ETNs could be available to UK investors for the first time as early as next week. The Financial Conduct Authority (FCA) ended its ban on cryptoasset exchange-traded notes (cETNs) on the 8th of October, but investors will need to wait a little bit longer to make purchases as the individual products will need to be approved by the FCA. This is expected to begin early next week and, once approved, cETNs will be eligible for inclusion in an ISA.
The lifting of the cETN ban marks a significant step in the regulator's easing attitude towards cryptoassets. David Geale, executive director of payments and digital finance at the FCA, said: "Since we restricted retail access to cETNs, the market has evolved, and products have become more mainstream and better understood. In light of this, we’re providing consumers with more choice, while ensuring there are protections in place. This should mean people get the information they need to assess whether the level of risk is right for them."
When will investors be able to buy cryptoasset ETNs (cETNs) in the UK?
Many UK investors will have had the 8th of October in their diaries for a long time, but cETNs will not be available from day one of the FCA lifting its ban. This has led to consternation from some corners of the investing industry and led to criticism of how the FCA has handled the process.
The delay is because any provider wanting to offer an cETN will need to apply to the FCA for approval by submitting a product prospectus, then wait for listing approval from the London Stock Exchange (LSE). This process has been ongoing for a couple of weeks and the first providers are expected to get the green light at the start of next week.
The regulator has defended its position, arguing that it "had to wait until the segment opened on the LSE before we could start reviewing prospectuses."
Which providers will offer a crypto ETN?
There are a host of providers ready to launch cETNs. FreeTrade, Fidelity, IG, AJ Bell, eToro and Interactive Investor are among the many platforms to have indicated that they will allow investors to buy crypto ETNs now that the ban has been lifted.
How do you buy a crypto ETN in the UK?
A number of investment platforms have indicated that they will allow customers to invest in cETNs. When each provider is able to offer their new products will vary, but significant movement is expected from 13th of October. Some will be looking to be among the first to have the option available to customers, while others – especially those with a history of crypto suspicion – may wait for the field to develop.
Can you buy a crypto ETN via an ISA?
HMRC has decided that crypto ETNs can be held in stocks and shares ISAs. However, this will only be possible until the end of the tax year, from which point they can only be held in an Innovative Finance ISA.
HRMC confirmed its position in a statement, saying: "Initially, cETNs will be automatically eligible for inclusion in stocks and shares ISAs. From 6 April 2026, they will be reclassified as qualifying investments within the Innovative Finance ISA (IFISA)."
It is not clear why HMRC are taking this slightly confusing position, but its statement did not set in stone that the ISA tax protections will not switch back to the stocks and shares ISAs in the long term.
"The government will keep the inclusion of cETNs in tax-advantaged accounts under review with a view to including them in the stocks and shares ISA at a later date as the market matures and as consumer understanding deepens."
Is a cETN less risky than buying crypto directly?
Crypto is considered a high-risk asset, no matter what form it takes. While the additional regulation that comes with the adoption of a UK crypto ETN could be seen to bring some stability, the inherent risk is still there. Furthermore, investing via an ETN also introduces counterparty risk, which is the risk that the issuer fails to pay the ETN's return.
The utility of cryptocurrencies is still questionable, especially as its use as a payment method has seemingly stalled, leaving it primarily as a speculative investment. The value of bitcoin and other popular coins have rallied in the last year, but have also nosedived in recent memory, so investing through any means is risky.
Hargreaves Lansdown, the UK's biggest retail investment platform, said: "We do not think cryptocurrency has characteristics that mean it should be included in portfolios for growth or income and shouldn’t be relied upon to help clients meet their financial goals."
That being said, the firm has not ruled out adding crypto products to its platform.
While cETNs will make it easier to consider crypto options alongside other high-risk assets without the hassle and risks associated with crypto exchange platforms, ultimately, cryptoassets are highly volatile and there is little or no financial protection if things go wrong. This means investing is only really suited to investors who understand the inherent risks associated with crypto and are prepared to lose all the money they invest.
What about crypto ETFs?
While many investors will be welcoming the arrival of cETNs, there may be some surprise that crypto ETFs remain unavailable in the UK. ETNs and ETFs are both exchange-traded products (ETPs) designed to mirror a performance, such as that of a cryptoasset, but with the crucial difference that ETFs hold assets while ETNs are structured as unsecured debt. The note element of an ETN is the promise to pay the holder a return based on a particular metric, in this case the performance of a cryptoasset. This can mean ETNs are more risky than ETFs because their value is also affected by the creditworthiness of the issuer, however they do not experience the same tracking errors that can be seen with ETFs.
While ETNs will soon be a major part of the crypto investment scene, the UK may need to wait a little longer for crypto ETFs. As part of its statement, the FCA said: "ETFs marketed to UK retail investors are unable to invest directly into cryptoassets under our current regulatory framework for funds. This framework would need to be updated before retail investors could access cryptoasset ETFs."
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