What is happening?

Cryptocurrencies will become available on the Saxo platform to UK retail clients from October 8th.

We will be able to give retail consumers access to crypto exchange traded notes (cETNs), under changes announced by the FCA in August, subject to passing a short appropriateness test within the platform.

This move ends a four-year ban that had prohibited ordinary investors from tax-efficient, exchange-listed crypto exposure.

Why the change?

The FCA says the market has evolved, with products such as ETNs becoming more mainstream and better understood. This is the latest development as the FCA continues to establish a regulatory framework for crypto. The FCA has updated its crypto roadmap and recently published proposals on stablecoins as well as other aspects of the regime. The FCA’s ban on retail access to cryptoasset derivatives will remain in place.

According to the FCA’s data, 12% of UK adults, around 7 million people, own some form of cryptocurrency. This is up from 4% in 2021 and indicates consumers are being more accustomed and knowledgeable about these assets.

What is a crypto ETN?

Crypto ETNs enable investors to trade securities which track cryptoassets. These are stock exchange-listed debt instruments that track the price of an underlying asset such as bitcoin, similar to gold ETCs that track the underlying price of the metal.

Investors should note that by investing in a crypto ETN they are exposed to the creditworthiness of the issuer. ETNs do not benefit from Financial Services Compensation Scheme (FSCS) protection.

What crypto ETNs can I invest in?

Initially, Saxo UK will be offering a range of Bitcoin and Ethereum-based ETNs.

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Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.

What are the key risks?

1. You could lose all the money you invest

• The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.

• The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.

2. You should not expect to be protected if something goes wrong

• The Financial Services Compensation Scheme (FSCS) doesn’t protect this type of investment because it’s not a ‘specified investment’ under the UK regulatory regime – in other words, this type of investment isn’t recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker here. [https://www.fscs.org.uk/check/investment-protection-checker/]

 • [The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm] or [Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA-regulated firm, FOS may be able to consider it.] Learn more about FOS protection here. [https://www.financial-ombudsman.org.uk/consumers]

3. You may not be able to sell your investment when you want to

• There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.

• Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.

4. Cryptoasset investments can be complex

• Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.

• You should do your own research before investing. If something sounds too good to be true, it probably is.

5. Don’t put all your eggs in one basket

• Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.

• A good rule of thumb is not to invest more than 10% of your money in high-risk investments. [https://www.fca.org.uk/investsmart/5-questions-ask-you-invest]

If you are interested in learning more about how to protect yourself, visit the FCA’s website here. [https://www.fca.org.uk/investsmart]

For further information about cryptoassets, visit the FCA’s website here. [https://www.fca.org.uk/investsmart/crypto-basics]