Introduction
Following the Financial Conduct Authority's (FCA) recent approval, retail clients in the UK will soon be able to invest in Crypto Exchange-Traded Notes (ETNs). This article explains the features, benefits, risks, and investment prerequisites of Crypto ETNs.
What are Crypto ETNs?
Crypto Exchange-Traded Notes (ETNs) are debt securities that track the performance of a cryptocurrency index. Investing in ETNs enables exposure to cryptocurrency markets without the complexities of direct asset management.
Investment Availability
This opportunity arises from the FCA's decision to permit retail investors to engage with crypto-related ETNs. however we have been advised by some issuers that while technically the ban will be lifted on the 8th of October, it is unlikely the products will be moved to the retail part of the LSE as issuers are still waiting for the retail prospectuses to be approved by the FCA (UK regulator), we will keep you updated & once available UK retail clients will be able to invest in Crypto ETNs.
Available Crypto ETNs
Saxo Markets offers access to 17 Exchange Traded Notes (ETNs) related to cryptocurrencies.
You can find our selection of ETNs by entering the name or ISIN (International Securities Identification Number) into search menu, please see example below.
Crypto ETNs with Saxo
- Simplified Access: Invest in a variety of cryptocurrencies through one product.
- Liquidity: As they are traded on major exchanges, ETNs can offer better liquidity compared to direct cryptocurrency investment.
Investment Prerequisites with Saxo
To invest in Crypto ETNs, clients must undergo an appropriateness test due to the complex nature of these products. This is accessible via the portfolio page banner (please see example below) or through My profile > Platform settings > Trading products and take the test for ETFs and Investment Trusts.
Important Considerations
- Market Volatility: Fluctuations in cryptocurrency prices can impact ETN performance.
- Issuer Risk: ETN performance may be influenced by the issuer's financial stability.
Key Risks
- Total Investment Loss: Be prepared to potentially lose all invested capital due to volatility.
- Protection Limitations: The FSCS does not cover ETNs as they aren't classified as 'specified investments.' Use the FSCS investment protection checker here.
- Liquidity Issues: The ability to sell ETNs depends on market conditions at any given time.
- Complexity: Crypto asset investments can be complex. Thorough research is advised.
- Diversification: It's safer not to invest all your money in one type of investment. Diversifying can reduce dependence on individual performance. The FCA suggests not investing more than 10% in high-risk assets. Explore more here.