- An FCA rule change will let retail investors in the U.K. access crypto exchange-traded notes (ETNs).
- A recent survey suggests 50% of U.K. investors aged 18–24 are interested in crypto ETNs.
- Reasons for their interest include being able to gain crypto exposure via tax-efficient ISAs and pension accounts.
From Oct. 8, asset managers will be able to offer exchange-traded notes (ETNs) with crypto exposure to retail investors in the U.K., lifting a ban that has been in place since 2021.
According to research by IG shared with CCN on Monday, Oct. 6, 50% of U.K. investors aged 18–24 would consider investing in crypto ETNs, signalling strong demand among the cohort.
Crypto ETNs Arrive in the UK
For asset managers, the lifting of the FCA embargo on crypto ETNs opens up one of the largest securities exchanges in the world—the London Stock Exchange.
Among potential issuers, Blackrock is at the front of the queue to list a Bitcoin ETN in London. Bitwise, WisdomTree, and 21Shares, which all list equivalent ETNs for qualified investors, are widely expected to follow suit.
In the meantime, 21Shares has partnered with Stratephy to make its existing products available to investors in the U.K.
The company currently offers crypto ETNs spanning Bitcoin, Ether and an array of altcoins. These can be accessed by retail investors on a network of European exchanges.
Significant Interest Among Young Investors
According to the IG survey, 30% of adults in the U.K. are open to investing in crypto ETNs, a figure that rises to 50% among 18-24-year-olds.
Those numbers are considerably higher than current crypto ownership rates in the country. A 2024 FCA survey found that around 12% of the U.K. population owned crypto, with the average value of holdings sitting at £1,842.
The discrepancy suggests British investors are drawn to the enhanced credibility of the ETN wrapper. Meanwhile, the IG report suggests a potential tax advantage may also explain the difference.
Tax Advantages of Regulated Crypto Products
Under U.K. regulation, investors can shelter deposits made into a stocks and shares ISA (interest savings account) from capital gains tax, up to a maximum allowance of £20,000 per year.
Meanwhile, deposits made into a Self-Invested Personal Pension (SIPP) account are eligible for government contributions that offset income tax.
However, both schemes are restricted to certain “qualifying investments,” which include shares listed on an eligible stock exchange, government bonds, and U.K.-recognised ETFs.
Among survey respondents who said they were likely to invest in crypto ETNs, 19% highlighted the ability to hold crypto within tax-efficient wrappers as a key advantage.
It is important to note that ETNs aren’t eligible for ISA tax relief. And although SIPP rules don’t explicitly prohibit ETNs, whether providers would be able to offer crypto products in a regulated manner remains to be seen.
For now, the only sure way for U.K. investors to incorporate crypto exposure into tax-sheltered accounts is via treasury companies like Strategy.
However, according to IG, there is strong public support for widening the eligibility criteria for qualified investments.
The survey found that 41% of respondents favored allowing crypto ETNs in ISAs, compared to just 20% who opposed the idea. For pension accounts, 37% supported their inclusion versus 21% who opposed it.
