Tax treatment of cryptoasset ETNs clarified
Sara White, Editor, Business & Accountancy Daily
Changes to crypto investment rules mean retail investors will be able to include cryptoasset exchange traded notes (cETNs) in innovative finance ISAs
The opening up of the market follows the removal of a UK ban from 8 October, which means retail investors can access cryptoasset exchange traded notes (cETNs) as part of their investment portfolio, the Financial Conduct Authority (FCA) has confirmed.
These products were previously restricted to professional investors, but will now be available to individuals through FCA-recognised investment exchanges.
Initially, cETNs will be automatically eligible for inclusion in stocks and shares ISAs, subject to HMRC sign-off.
‘ISA managers who want to offer cETNs within an IFISA will need HMRC approval to offer the IFISA,’ HMRC confirmed in a policy statement.
From 6 April 2026, they will be reclassified as qualifying investments within the Innovative Finance ISA (IFISA).
To ensure additional safeguards for UK retail consumers, the FCA said cETNs will be subject to the regulator’s Conduct of Business sourcebook (COBS) and related financial promotion rules, including marketing restrictions such as risk warning requirements. Firms offering cETNs to retail consumers will have to comply with the Consumer Duty rules.
However, investors will not be covered by the Financial Services Compensation Scheme (FSCS) from firm failures.
The government said the decision to expand cETNs to the public reflects a ‘commitment to ensuring that UK savers can access a diverse range of assets within tax-advantaged wrappers, while recognising the evolving nature of digital finance’.
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.
HMRC policy paper, Tax treatment of cryptoasset Exchange Traded Notes
