U.K. Bans Crypto ETNs From Stocks and Shares ISAs Starting April 6

U.K. investors will soon lose the ability to hold crypto exchange-traded notes (ETNs) in tax-free individual savings accounts (ISAs), following a new ruling by His Majesty’s Revenue and Customs (HMRC). Beginning April 6, the start of the new tax year, cryptocurrency ETNs will no longer qualify for inclusion in mainstream stocks and shares ISAs, according to a report by the Financial Times.

Instead, HMRC will reclassify crypto ETNs as eligible only for Innovative Finance ISAs (IFISAs). While ISAs allow individuals to invest up to £20,000 per year without paying income tax or capital gains tax on returns, IFISAs are far less commonly used than traditional cash ISAs or stocks and shares ISAs. IFISAs are typically designed for peer-to-peer lending and crowdfunding investments, and none of the 57 authorized IFISA providers currently plan to offer crypto ETNs. This effectively removes access to crypto ETNs within a tax-efficient ISA wrapper for most retail investors.

The decision comes months after the Financial Conduct Authority (FCA) lifted its ban on retail access to crypto ETNs in October, a move widely seen as a milestone for cryptocurrency investment adoption in the U.K. Many industry participants had expected crypto exchange-traded products (ETPs) to become available through everyday investment accounts, including ISAs.

Investors who already hold crypto ETNs within their ISAs will not be required to sell their positions. HMRC noted that forcing disposals could create potential market disruption. The tax authority described crypto ETNs as “innovative” and part of an “emerging market,” adding that the policy will remain under review and could be reconsidered in the future.

Industry leaders warn the change may leave the U.K. trailing other major financial markets, where regulated crypto ETPs have broadened access to digital assets. Fidelity’s George Bauer criticized the move, urging policymakers to allow crypto ETNs within widely used stocks and shares ISAs to support regulated crypto investment growth.