UK Investors Have Until April to Add Crypto ETNs to ISAs

Crypto ETNs will no longer qualify for inclusion in the UK's mainstream stocks and shares ISAs after April 6, according to a report from the Financial Times published on Wednesday. His Majesty's Revenue and Customs is set to reclassify cryptocurrency exchange-traded notes so they are only eligible for Innovative Finance ISAs, a far less accessible wrapper that effectively strips most investors of their tax-free advantage on crypto products.

HMRC's Crypto ETN Reclassification Explained

The reclassification means crypto ETNs will shift from qualifying for stocks and shares ISAs to being confined to Innovative Finance ISAs, known as IFISAs, starting with the 2026-27 tax year. UK individual savings accounts allow residents to invest up to 20,000 pounds (roughly $27,000) annually without incurring income tax or capital gains tax on their returns. Cash ISAs function like interest-bearing bank accounts, while stocks and shares ISAs hold equities and exchange-traded instruments.

IFISAs represent a relatively obscure investment vehicle, used primarily for peer-to-peer lending and crowdfunding. None of the 57 platforms currently authorized to provide IFISAs have indicated any intention to support crypto ETNs, according to the Financial Times, meaning investors will effectively lose their tax shield on new purchases.

What Does the Crypto ETN ISA Change Mean for UK Investors?

The practical impact is severe: British investors will be unable to hold new crypto ETN positions inside the tax-free wrapper that most people actually use. The Financial Conduct Authority's decision last October to lift its ban on retail access to crypto ETNs had been widely hailed as a breakthrough for cryptocurrency adoption in the UK, precisely because it opened the door to ISA inclusion.

Existing holders will not be compelled to liquidate their crypto ETN positions within ISAs, however. HMRC noted that forcing sales 'could risk some level of market disruption,' according to the report.

Industry Pushback and Global Comparisons

The restriction threatens to make the UK an outlier among leading financial markets. In jurisdictions such as the United States, exchange-traded products have significantly expanded crypto investment access for retail participants by eliminating the technical complexities of managing exchanges and wallets directly.

George Bauer, Fidelity's head of investment and product for global platform solutions, said the government's stance 'challenges the intention of allowing regulated access to crypto assets,' the Financial Times reported. He urged HMRC to reverse course and permit crypto ETNs within stocks and shares ISAs, which he described as 'much more widely used.'

We would encourage the government and HMRC to reconsider this and allow access through stocks-and-shares ISAs which are much more widely used.

— George Bauer, Head of Investment and Product, Fidelity

What This Means Going Forward

HMRC attributed its decision to crypto ETNs' 'innovative nature and the fact that is an emerging market,' adding that the classification remains under review. The authority left open the possibility of eventually including crypto ETNs in stocks and shares ISAs at a later date, though no timeline was specified.

For now, UK crypto investors face a narrowing window. Anyone looking to add crypto ETNs to a stocks and shares ISA must act before April 6, after which the tax-efficient route will be closed indefinitely. HMRC did not respond to requests for comment.