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Tax-free bitcoin is back: How UK investors can avoid paying duty on crypto investments once more
TL;DR
UK investors can now hold tax-free cryptocurrency exchange-traded notes (ETNs) in a special class of individual savings account (ISA) after Stratiphy's approval. This allows users to save up to £20,000 annually without incurring income or capital gains tax.
Key points
- UK investors can hold crypto ETNs tax-free in ISAs
- Stratiphy received approval to offer crypto ETNs
- ISAs allow saving up to £20,000 annually without tax
Mentioned in this story
StratiphyHis Majesty's Revenue and Customs
Investors in the U.K. can once again hold cryptocurrency exchange-traded notes (ETNs) in a tax-free vehicle after fintech startup Stratiphy received approval to offer them in a special class of individual savings account (ISA), according to a report by the Financial Times on Wednesday.
Stratiphy, a fintech platform that allows users to personalize their investment strategies, is offering both crypto ETNs and Innovative Finance ISAs (IFISAs), the wrapper authorized to invest in them, the FT reported.
ISAs allow users to save up to 20,000 pounds ($27,000) a year without paying income tax or capital gains tax on the returns. The two most common types are cash ISAs, which pay interest, and stocks and shares ISAs, which invest in equities and exchange-traded instruments.
At the end of February, the U.K.'s tax authority, His Majesty's Revenue and Customs (HMRC), classified crypto ETNs as instruments only available in IFISAs from the start of the current tax year on April 6.
This essentially made last year's decision to lift the ban on retail users accessing crypto ETNs redundant because no mainstream investment platform offered IFISAs. The few that did had no plans to offer crypto products.
The decision drew criticism from some commentators, who said it risked making the U.K. an outlier among markets where exchange-traded products (ETPs) have made crypto investment available to a far broader base of retail investors.
Stratiphy will offer access to three ETNs provided by 21Shares: those covering bitcoin BTC$78,983.22, ether (ETH) and one combining BTC and gold.
The London-based investment platform, which opened for business in August last year, manages 4 million pounds ($5.4 million) for 2,000 retail and corporate clients.
"We see a disproportionate level of interest in these [crypto] products," CEO Daniel Gold said, according to the newspaper.
"It's a really interesting way to diversify your portfolio. It's a new asset class with low correlation to other asset classes."
Stratiphy did not immediately respond to CoinDesk's request for comment.
Q&A
How can UK investors hold tax-free bitcoin?
UK investors can hold tax-free bitcoin by using cryptocurrency exchange-traded notes (ETNs) in a special class of individual savings account (ISA) offered by Stratiphy.
What are the benefits of using an ISA for crypto investments in the UK?
Using an ISA for crypto investments allows UK investors to save up to £20,000 annually without paying income tax or capital gains tax on their returns.
What is the role of Stratiphy in offering tax-free crypto ETNs?
Stratiphy is a fintech startup that received approval to offer cryptocurrency ETNs within a special class of ISAs, enabling tax-free investment options for UK investors.
