Tax treatment of cryptoasset Exchange Traded Notes policy

HMRC has clarified the tax treatment of cryptoasset Exchange Traded Notes (crypto ETNs) following changes to Financial Conduct Authority (FCA) rules from 8 October 2025, which now allow retail investors to access these products. The new policy confirms that crypto ETNs may be held within pension funds and ISAs going forwards, subject, however, to some potentially significant restrictions.

Background

Crypto ETNs are debt securities designed to track the performance of referenced cryptoassets. Historically, FCA rules did not allow the sale of crypto ETNs to UK retail investors. Due to these restrictions, investors who wished to have investment exposure to crypto within a tax-efficient ISA (including capital gains tax exemption) had to buy crypto proxy stocks or funds that are comprised of similar stocks.

However, from 8 October 2025, changes to FCA rules allow retail investors to access crypto ETNs. These products, previously restricted to professional investors, will be available to individuals through FCA-recognised investment exchanges. This change initially left open the question whether such crypto ETNs would qualify for inclusion in ISAs and registered pension schemes. HMRC has now confirmed in a Policy Statement that they will.

Policy Statement

The Policy Statement confirms that, to support long-term savings and investment habits, the government is allowing crypto ETNs to be held within registered pension schemes from 8 October 2025.

The position in relation to ISAs is more complicated, however. Initially, crypto ETNs will be automatically eligible for inclusion in stocks and shares ISAs. But, from 6 April 2026, they will be reclassified as qualifying investments within the Innovative Finance ISA (IFISA). This appears to mean that there is a short window of opportunity to include crypto ETNs in a normal stocks and shares ISA, before they are restricted to inclusion only in an IFISA.

The Policy Statement notes that the "government will keep the inclusion of [crypto ETNs] 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".

The Policy Statement explains that the "policy reflects the government's 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 remains supportive of the UK's growing cryptoasset sector and continues to develop a comprehensive regulatory framework that fosters innovation while protecting consumers."

Some uncertainty remains around the continuation of crypto ETNs included in a standard stocks and shares ISA before April 2026. The Statement merely confirms that "Any [crypto ETNs] that have been included in stocks and shares ISAs before 6 April 2026 will be treated as qualifying IFISA investments from that date". Whilst it is clear that, from April 2026 onwards, a person will no longer be able to buy crypto ETNs into a stocks and shares ISA and will only be able to do so using an Innovative Finance ISA, it is unclear whether crypto ETNs that are already in a stocks and shares ISA before 6 April 2026 can continue to be held in one after that date or if, instead, any existing crypto ETNs held will from that date be deemed to be held in an Innovative Finance ISA (and, if this is the case, whether account managers who only offer stocks and shares ISAs will be required to take action to facilitate this switch).

The Policy Statement notes that HMRC will update the ISA managers' guidance and it is hoped that this will provide further clarification of the position.