Crypto funds creep into ISAs
New rules from HMRC now mean a form of crypto investment fund is eligible for ISA investment.
New rules from HMRC now mean a form of crypto investment fund is eligible for ISA investment.
Source: Investing.com
In recent years, cryptoassets – ranging from Bitcoin through stablecoins to Bored Ape Yacht Club non-fungible tokens (NFTs) – have attracted considerable attention. The arrival of Donald Trump in the White House has boosted the crypto sector, despite stating in his first term that cryptocurrencies were “not money” and had value that was “highly volatile and based on thin air”. In his second term, however, it is reported that President Trump has personally earned millions of dollars from World Liberty Financial, a cryptocurrency company established by his sons in September 2024.
On this side of the Atlantic, there is a stark difference in the relationship between government and cryptoassets. There is no Starmer meme coin to rival the TRUMP meme coin, launched three days before the start of Trump’s second term. When in the role of Chancellor, Rishi Sunak said that he wished “to make the UK a global cryptoasset technology hub”, but three-and-a-half years later, there is little evidence of that happening.
The UK’s financial regulator, the Financial Conduct Authority (FCA), has spent much of this decade being distinctly cautious about cryptoassets, which were – and still largely are – classed as unregulated investments. In October 2020, the FCA announced a ban on a specific form of collective investment, Exchange Traded Notes (ETNs), which were linked to cryptoassets. The regulator said:
“The FCA considers these products to be ill-suited for retail consumers due to the harm they pose. These products cannot be reliably valued by retail consumers because of the inherent nature of the underlying assets, which means they have no reliable basis for valuation.”
Five years later, almost to the day, the FCA lifted the ban on crypto ETNs, prompting HMRC to announce that these funds would be immediately eligible for inclusion in stocks and shares ISAs. However, HMRC also announced that after 5 April 2026, crypto eligibility for stocks and shares ISAs would cease, and crypto ETNs could only be purchased and held in Innovative Finance ISAs, an ISA variant that few ISA managers offer.
If you are tempted to hold crypto in an ISA, remember what the FCA had to say about cryptoassets back in 2020: they have no reliable basis for valuation.
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