The true identity of Satoshi Nakamoto – the pseudonymous inventor of Bitcoin – is perhaps "the biggest unsolved mystery of the technology world", says Satyen Bordoloi on Sify.com. For 18 years, Nakamoto has been searched for, speculated about and occasionally wrongly outed. But could he/she/they have been hiding in plain sight all along?

That is the contention of New York Times journalist John Carreyrou, who believes he has finally established the true identity of the inventor of Bitcoin, Satoshi Nakamoto. He points the finger at Adam Back – a mild-mannered 55-year-old British developer, with the air of “a dishevelled mathematician”, who was active in the cryptocurrency from its inception in 2008 and has since “built a mini empire of Bitcoin-related companies and become one of the community's most influential members”.

Back, who is based in Malta, has been named before and he denies the charge. What triggered Carreyrou's two-year investigation was an appearance he made as an expert witness on a 2024 HBO documentary Money Electric. Carreyrou found the film's contention that Satoshi Nakamoto was the Canadian crypto expert Peter Todd unconvincing. But a scene showing Back “fidgeting” nervously when asked if he was Satoshi Nakamoto was a light-bulb moment. He now claims that forensic linguistic analysis shows “striking similarities” between Back's emails and posts and Satoshi's known output – and also in their shared enthusiasms, bugbears, coding preferences and esoteric knowledge. Back dismisses Carreyrou's evidence.

“Whatever the truth” about Adam Back's contribution, he certainly “helped shape the ideas behind the cryptocurrency”, says The Sunday Times. The melting pot from which bitcoin eventually emerged was a 1990s libertarian movement that called itself Cypherpunk – an international group of mathematicians, cryptographers, coders and anarchists who met online and debated on early internet forums. At the time, Back was a PhD student in computer science at the University of Exeter.

Is Adam Back Satoshi Nakamoto?

It was a fellow student who alerted Adam Back to a free encryption program called PGP (“Pretty Good Privacy”), which people used to avoid surveillance. Money was in the Cypherpunks' sights from the beginning. “To me, crypto anarchy is a means to achieve a more libertarian government,” Back wrote in 1996 – a decentralising message echoed in the white paper Satoshi Nakamoto wrote when he introduced his “Peer-to-Peer Electronic Cash System” more than a decade later. Satoshi Nakamoto also used Hashcash – “a statistical, puzzle-solving system” invented by Adam Back – to mine the first bitcoins. An early clue to Satoshi Nakamoto's nationality – seized upon by some – was his use of a British expletive.

Despite regular appearances at industry events, Adam Back remains guarded about his personal life and privacy, says The Sunday Times. The Carreyrou thesis has cast an unwelcome spotlight. Like The Economist, Back believes that if Satoshi Nakamoto was exposed as a real person, “the world of bitcoin would lose much of its magic”.

Carreyrou remains convinced he's found “the right man”, but we've been here before. Ultimately, the only means of proving Satoshi Nakamoto's identity is “cryptographic”, says Sify. Without evidence of a “private key signature”, or “verified movement of Satoshi's wallets”, even the most forensic investigation is nothing more than a “hypothesis”. The identity of the inventor of Bitcoin remains a mystery.

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HMRC is dramatically increasing enforcement on digital assets, including on those who may not realise they owe any tax at all.

Crypto’s pseudo-anonymous and complex nature means many people do not pay the right tax on holdings. UK government estimates suggest non-compliance with the tax rules could range from 55% to as high as 95% among crypto asset investors.

Many investors are likely to be unintentionally underpaying taxes on their crypto assets, especially capital gains tax (CGT), but nevertheless risk penalties and surprise tax bills.

We look at ways to reduce your capital gains tax bill in a separate article.

HMRC crypto crackdown

HMRC is increasingly intervening to claw back the tax it is owed. It sent as many as 101,024 CGT warning or ‘nudge’ letters to investors in crypto assets between 2020 and 2025, according to new Freedom of Information (FOI) data obtained from HMRC by comparison platform BrokerChooser.

This is more than 40 times the amount issued for shares and securities (2,358), suggesting crypto investors are now HMRC’s largest capital gains tax compliance target, far overtaking traditional assets such as stocks and property.

The number of crypto-related nudge letters HMRC sent more than tripled between 2021/22 (8,329) and 2023/24 (27,712), before soaring to 64,982 letters in 2024/25, an increase of 680% in just three to four years.

Over 560 times more letters were sent regarding crypto than traditional share disposals in the financial year 2023/24, with just 49 letters issued for shares and securities compared to 27,713 crypto letters.

Adam Nasli, head broker analyst at BrokerChooser, said: “To ensure you stay tax-compliant in 2026, we urge investors to keep detailed records of all purchases, sales, swaps, transfers and payments made using cryptocurrency.

“Many investors assume small trades don’t count, but even simple swaps can trigger tax liabilities. Investors must review official guidance or seek professional advice to ensure gains are reported correctly.

“If you think you may have underreported crypto gains, we recommend using HMRC’s voluntary disclosure service to reduce penalties. By proactively disclosing errors, you can reduce penalties for careless mistakes to as low as 0% and for deliberate actions to between 20% and 70%.”

Confusion on crypto asset tax rules

While crypto enforcement has soared in 2024/25, it remains likely that many letters may have been issued for unintentional non-compliance.

Confusion around crypto tax rules is widespread. When HMRC published its research report on the uptake and understanding of crypto assets in the UK in 2022, only 50% were aware tax liabilities can arise when converting crypto assets into fiat currency like pounds sterling.

Only 28% had seen HMRC's guidance on the tax treatment of crypto assets, and only 16% had sought tax advice in respect of their crypto assets. Capital gains tax is the principal tax that will likely apply to individual investments in crypto assets, but 59% of crypto asset owners said they know little or nothing about CGT.

But while there may be honest mistakes, HMRC can still impose penalties if you did not take “reasonable care” to check your tax liability.

How crypto investors can reduce their tax penalty risk in 2026

To avoid a surprise tax penalty for non-compliance with the rules, crypto investors are being urged to ‘TRACK’ their investments in 2026:

1. Track every crypto transaction

2. Remember that token swaps can trigger tax

3. Account for everyday crypto use

4. Check HMRC guidance

5. Keep mistakes transparent

MoneyWeek has contacted HMRC asking for comment.

When British police seized 61,000 bitcoin from Qian Zhimin – a Chinese conwoman on the run – they hailed it as the largest seizure of cryptocurrency ever. Now a legal battle is intensifying over the haul which, at current prices, is worth around £3.2 billion. After the self-described “Goddess of Wealth” was jailed for 11 years for money laundering in the autumn, the chancellor reportedly “earmarked” most of the stash “to shore up the government's finances”, says The Times.

Many of Qian Zhimin's 128,000 Chinese victims are crying foul, however. They insist the compensation scheme proposed by the UK is inadequate because it fails to capture the massive rise in the value of bitcoin, which has more than quintupled since the fraud unravelled – and are fighting to stop the British state from benefiting, says the Financial Times. Prosecutors say litigation firms representing the victims are merely trying “to cash in”.

It is a fittingly messy climax to a long-running saga that has drawn a good deal of attention in China, where Qian Zhimin is viewed as a “super-villain”, says the South China Morning Post. By the time Chinese police busted her massive pyramid scheme, which ran from 2014 to 2017, she is reckoned to have conned investors, many elderly, out of more than 40 billion yuan (around £4.4 billion). Qian Zhimin dangled returns of up to 300% for investing in Tianjin Blue Sky Grid Electronic Technology, which claimed to offer everything from bitcoin mining to air purifiers, says The Economist. “In fact, the firm's funds mainly came from depositors who, in typical Ponzi fashion, were offered rewards to recruit others.” Qian Zhimin appears to have had a mesmerising effect on victims, who were lured to conferences at luxury hotels across China. She tapped into her audience's patriotism and skilfully manipulated their generational gripes.

Little is known about Qian Zhimin's early life, beyond the fact that she was born in 1978. But her extraordinary trajectory and grandiose schemes hint at an unscrupulous personality with fantasist tendencies. You can't fault her derring-do. When the balloon went up in 2017, Qian Zhimin fled China on a moped to Myanmar, having smuggled out her bitcoin stash, says The Guardian. She fetched up in Britain under the alias “Yadi Zhang”. It was the start of an extravagant seven years on the run. Qian Zhimin rented a mansion on the edge of Hampstead Heath, posing as a wealthy antiques and diamond heiress, and hiring a “personal assistant” to help launder the crypto into cash and property. Qian Zhimin herself “spent most of her days lying in bed, gaming and online shopping”, while drawing up bold schemes to secure her freedom. She planned to found an international bank, buy a Swedish castle and ingratiate herself to a British duke. But the grandest scheme was to make herself queen of Liberland – an unrecognised microstate on the Croatian-Serbian border – which she would run as a bitcoin fiefdom, believing it would entitle her to immunity from prosecution, says the BBC. A budget of £5 million was set aside for a set of crown jewels.

Crypto worth £67 million found in Qian Zhimin's London property

The dragnet started closing in when police were alerted to her assistant's attempt to buy a £24 million London property. A raid revealed hard drives and laptops loaded with tens of thousands of bitcoin. Qian Zhimin vanished the day before she was due to be interviewed in September 2020. It would be four years before she was finally caught after police noticed that a bitcoin wallet they were monitoring had been accessed by a Malaysian-born businessman whom Qian Zhimin had recruited as her “butler”, says The Times. They followed him to a house in York. When Qian Zhimin was arrested, a memory stick “in a secret pocket of her jogging bottoms” was found to contain the codes for £67 million of bitcoin. Given half a chance, she was ready to make a run for it.

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I have been bullish on bitcoin and gold for many years and continue to be. I created the Bold index, which combines the two on a risk-weighted basis.

Bitcoin is on the floor, and the bulls are few, whereas gold is riding high and bulls are plentiful. What does the contrarian investor do?

I pair them because they are the world’s two most liquid alternative assets. Both have limited supply and share the notion that the world is eternally printing money, and it stands to reason that scarce assets will perform over time.

They are both neutral assets – they are accepted around the world.

They are also both rebel assets.

Bitcoin came from the grass roots of the computing world, and the authorities cannot control it.

Gold is also a rebel asset, because it holds governments to account.

If the gold price is going up too fast in a currency, it means capital is leaving the system.

I say that despite the central banks investing in gold. Let us be clear that it is not the G7 buying gold. It is the non-OECD states that are trying to diversify their reserves away from G7 bonds.

In the physical sense, bitcoin and gold have little in common, because bitcoin is not physical, it is virtual. At least, that is the “boomer” view.

Young people are much more comfortable with the idea of digital property, and the future is whatever they will make it to be.

Indeed, it comes with many advantages, such as the ability to transact instantaneously, securely and seamlessly across borders. It’s not just bitcoin, they say, this is the future of the financial system.

After bitcoin comes Ethereum, which underpins the $310 billion stablecoin market – much of which uses its network.

Stablecoins allow you to transact digital cash without using a bank.

A future without banks collecting fees from the payment system? Absolutely. Ethereum also enables transactions in pretty much anything and could be the basis of future stock and bond markets. Its operating system has been upgraded yet again, and it can deliver scale at low cost.

Bitcoin and gold: what’s the sentiment?

It’s all very exciting, but then again, so is technology. Bitcoin is, in some ways a tech stock and has always been correlated with the tech sector. Prices have been tumbling in tech, and it should come as no surprise that bitcoin has followed.

Fear drives more fear, and a falling price is always glee for the permabears. The bears point to the four-year cycle, which is currently in the dip phase. But tech is also in the dip phase, and does that have a four-year cycle? If there is a cycle, this one started early.

There is also the threat of quantum computing, which will have enough computing power to break the early bitcoins “mined” (released electronically into circulation) in 2009 and 2010.

It is possible that this could happen in the coming decade, but such powerful computers will surely be in the hands of tech companies before bad actors, and in any case, they will have other priorities should that come about.

In the meantime, all bitcoin needs to do is lengthen the private keys (passwords) with a network upgrade, and that will keep even these powerful computers at bay. The threat of quantum is overstated, but if people are worried about it, the price will feel it.

The miners operate at a speed 1 ZH/s (zetta hash per second). That is 1 followed by 21 zeros. That is a vast amount of computing power that needs to be broken. Still worried about quantum?

While the bear stories are well known for bitcoin, what are they for gold? There aren’t any, which is why contrarians should be wondering when the top is coming. The bulls say gold can do no wrong, as it is driven by infinite buying from central banks, who are prompted by geopolitical and macroeconomic fear, which is only rising. I agree, the world is unstable in parts, but nothing goes on forever.

I created Bold because these assets have similar long-term goals, exhibit low correlation, and are a natural pairing. That means they are both monetary assets, and when one is going up, the other is often going down. That is perfect for diversification.

Consider that you could have two assets, and they moved together. Alternatively, you could hold two assets that acted independently. The latter choice means you will have a less stressful life, and if you took the time to rebalance them when the prices had moved apart, you’d make even higher returns.

That is what Bold does with bitcoin and gold. Each month, we calculate their risk weights, which are driven by the past year’s volatility. The less volatile asset, gold, gets a higher weight. Then, at the end of each month, they are rebalanced, returning the weaker asset to its prescribed weight. By repeatedly buying low and selling high, good things happen.

Bitcoin is a globally recognised, highly liquid alternative asset with a unique position in the world of digital assets.

Following the Financial Conduct Authority’s policy shift last year, Bold is available to UK investors in the form of an exchange-traded product (ETP): my 21Shares Bitcoin Gold ETP (LSE: BOLD).

Today, bitcoin is more oversold relative to gold than at any point in its history. For those looking to bank some gold gains and diversify, Bold offers an intelligent solution.

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Cryptocurrency does not feature in our strategic portfolio, partly because we are not yet converts to the idea of crypto as a fundamental asset. There’s an obvious appeal to the idea of a currency that lies outside government control. Yet the two biggest cryptocurrencies – bitcoin and ether – have significant disadvantages for transactions compared with existing payment networks. The need for a stable store of value is obvious given the growing long-term risks of currencies being debased. Yet gold still seems a superior choice in almost all ways. All this makes it difficult to decide whether cryptocurrency is truly a revolution that will find more and more mainstream applications, or the ultimate expression of our bubble-prone era.

Still, we certainly cannot not dismiss the way that bitcoin has soared over the past decade. Yes, much of this took place against a backdrop of ultra-low interest rates, which created many bubbles. More recently, the pro-crypto stance of the Trump administration gave it a further boost for equally speculative reasons. To the extent that US government has a coherent policy, it is to encourage stablecoins – digital currencies backed by assets such as government bonds – in an attempt to entrench the dominance of the dollar and provide a steady source of demand for the vast amount of US Treasuries it is issuing. (This is very different to supporting bitcoin and ether.)

That said, if cryptocurrency is purely a bubble, it is a resilient one – bitcoin has rebounded from multiple huge sell-offs. The more that happens and the longer bitcoin and ether stick around, the more chance they find broader mainstream use. The adoption of new standards is often down to building faith in them, which comes from seeing them tested to see if they break.

Cryptocurrency ETFs are now available to UK investors

A secondary reason we haven’t used cryptocurrency is that, until late last year, private investors in the UK could not invest in regulated crypto exchange-traded products. This was always a bizarre decision, since it pushed investors towards unregulated exchanges with much less protection. Thankfully, the regulator belatedly saw sense, and we can now access products such as CoinShares Physical Bitcoin (LSE: BITP) and WisdomTree Physical Bitcoin (LSE: WXBT).

That’s why last week I was at the London listing of the latest crypto-linked product: 21Shares Bitcoin Gold (LSE: BOLD), created by MoneyWeek contributor Charlie Morris. BOLD is an interesting idea: it holds a mix of gold and bitcoin in proportion to their past volatility, rebalancing monthly. The principle is that bitcoin and gold have low correlation (bitcoin does well in risk-on conditions, gold does well in risk-off conditions) and hence can complement each other. BOLD has been listed on Switzerland since April 2022 and over that time has returned 108% with much less volatility than bitcoin (go to bold.report for more details).

I’m not proposing BOLD for our portfolio yet, but this is the kind of basis on which we might use cryptocurrency – not as a firm view on how it will be adopted, but rather the properties it shows when trading. Crypto-curious investors may want to take a closer look at how it performs.

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New rules mean it will be harder for investors trading Bitcoin, Ethereum, Tether or other popular cryptocurrencies to avoid paying taxes on their gains, as crypto investment platforms will be forced to pass your personal details to HMRC for tax purposes.

The Cryptoasset Reporting Framework (CARF) came into effect on 1 January, and requires crypto firms to provide information to HMRC on the activity and tax residency of their users.

The CARF is a multinational agreement. Information on non-UK users will be exchanged with jurisdictions who have also implemented the CARF, while HMRC will likewise receive information on UK-based crypto investors that have used platforms in other CARF-compliant countries.

These disclosures will make it harder for investors to avoid declaring capital gains by investing in cryptocurrencies such as Bitcoin.

“These new rules coming into force from 1 January will give HMRC access to a much richer dataset on crypto asset investors and their transactions,” said Dawn Register, tax dispute resolution partner at accountancy firm BDO. “Information will be shared automatically across international borders, allowing HMRC to better target those UK tax residents it suspects of failing to correctly declare their gains.”

What do the new changes mean for crypto investors, and when will you need to pay tax on your crypto?

How are cryptocurrencies taxed?

Simply put, crypto assets (including cryptocurrencies) become subject to capital gains tax (CGT) when they are disposed. If you make a profit on disposal of a crypto asset, that will count towards your CGT calculation for the year in which you made the trade.

Disposal can refer to selling a crypto asset for fiat currency, trading it for another crypto asset, spending it, or gifting it to someone else (other than a spouse, civil partner or a charity).

If your total gains from disposing assets falls above the CGT threshold then you will need to report the gains to HMRC in a tax return and pay CGT.

But the transnational, decentralised nature of cryptocurrencies has historically made it difficult for tax authorities to collect the capital gains owed on crypto investments.

“HMRC has been concerned for some time about high levels of non-compliance among crypto investors,” said Register.

“Those who made crypto gains in the 2024-2025 tax year may be required to file a tax return before 31 January 2026,” she continued.

HMRC is also looking to encourage people who have underpaid CGT on crypto assets in previous years to correct their affairs by running a disclosure facility for undeclared gains or unpaid tax prior to April 2024.

How to reduce your CGT on crypto assets

If you have disposed of crypto assets at a loss, then you can offset this against your profits for CGT purposes.

“Investors can also report losses up to four years after the end of the tax year in which they disposed of a crypto asset. This can be offset against any CGT charge in the current tax year or carried forward to future years,” said Register.

Most crypto assets can’t be directly held in an ISA, but there are some ways to gain exposure to crypto price movements within the tax-efficient wrapper.

Crypto exchange-traded notes (ETNs) can be held in a stocks and shares ISA until 5 April. After that, they will need to be held in the less commonly-used Innovative Finance ISA.

That poses a risk to crypto ETN investors because they may be forced to sell at a loss if the crypto market is enduring a downturn at the time, crystallising losses. In that scenario, though, the loss could be offset against any other profits for CGT purposes.

If you are investing, you may also be interested in our article on 10 ways to cut your capital gains tax bill.

The way that central banks responded to the global financial crisis almost 20 years ago is often derided as “printing money” and “debasement”. This shorthand is odd. Whereas a Roman emperor might debase a coin by reducing its precious metals content or a Weimar chancellor might print banknotes, now money creation is digital. That’s because in a modern economy, money takes the form of bank deposits stored electronically.

Unlike banknotes, which are printed on polymers with holograms and foil patches to prevent forgery, electronic money is replicable. Anything digital can be copied ad infinitum. An album on Spotify or a video on YouTube can be streamed all over the world at close to zero marginal cost. For most digital assets this doesn’t matter – millions of people can own the same album. But for digital money to hold its value, different people can’t simultaneously use the same asset.

To prevent double-spending, bankers adopted centralised electronic ledgers, recording transactions between counterparties, verifying and confirming the change in balances between the two account holders. Centralised ledgers form the backbone of the financial system, handling trillions of transactions. Then around 20 years ago, crypto enthusiasts invented an alternative to centralised ledgers – distributed ledger technology (DLT), where a DLT is maintained across a network of computers rather than being held by a central authority such as the central bank.

It’s not entirely clear what problem the innovators thought this was solving. Yes, bitcoin’s value has increased exponentially, to such an extent that the 10,000 bitcoins used to buy two pizzas in the first real-world transaction in 2010 would now be worth a billion US dollars. Yet despite this, bitcoin has failed to achieve the original ambition set out by the pseudonymous Satoshi Nakamoto in his or her original white paper titled Bitcoin: A Peer-to-Peer Electronic Cash System.

To take one telling example, a bitcoin conference in Miami had to stop accepting bitcoin payments for tickets due to network congestion, high transaction fees and the manual processing required. Organisers admitted the cryptocurrency was simply too impractical for everyday transactions like selling tickets. Similarly, Tesla began accepting bitcoin as payment for cars in 2021, yet Elon Musk reversed this decision within a couple of months, ostensibly for environmental reasons, as the process was so energy intensive.

Stablecoins: A “trading bridge” to crypto markets

Now a new kind of distributed ledger innovation is starting to occupy the spotlight: stablecoins. There are now more than $250 billion of stablecoins, up 59% year on year. These tokens are not designed for speculation: they are built for stability and transactions and are far more energy efficient than bitcoin.

A stablecoin is a cryptocurrency that aims to maintain a stable value relative to another asset, such as the US dollar. They were originally developed as a “trading bridge” to crypto markets. Investors use them to park profits from selling bitcoin and other cryptocurrencies, without having to convert back into money held within the traditional banking system.

Banks and neo-banks such as Revolut and N26 allow customers to buy crypto, but they will often block accounts that transfer in large sums of crypto from unidentified sources due to anti-money laundering (AML) requirements. As stablecoins operate on public blockchains, their compliance model is fundamentally different. They generally do not do know your customer (KYC) processes for their individual users. Instead they rely on crypto exchanges such as Binance, Coinbase or Kraken to do the KYC.

Much of the momentum for stablecoins has come from acceptance by financial regulators, particularly the Trump administration’s Genius Act. Financial institutions can now treat stablecoins like cash on their balance sheet, pegged to the value of the US dollar. Growing acceptance mean they are being plumbed into the pipes of the financial system.

For instance BlackRock, the world’s largest asset manager with over $10 trillion assets under management (AUM), announced a partnership with cryptocurrency exchange Circle that aims to enable USDC (Circle’s dollar-pegged stablecoin) to function as a form of programmable digital cash on the internet. BlackRock’s role is to provide an underlying cash-reserve investment, similar to a money market fund that invests in short-term government debt.

Tether’s money machine

Tether, the largest stablecoin with close to $180 billion in circulation, is 75%-backed by holdings in US government debt. In effect, Tether is able to borrow huge amounts from customers, pay no interest, invest the money in safe assets yielding 4% and keep 100% of the returns, amounting to annual interest of $7 billion.

This is an amazingly lucrative business model , yet somehow it is not enough, since Tether is already deploying 25% of its deposits elsewhere. This includes bitcoin and over 100 tonnes of gold – the growing popularity of gold reflects that “the world is going toward darkness”, according to CEO Paolo Ardoino.

A week ago, Tether made an all-cash proposal to buy Juventus Football Club. The press release does not make it clear whether it is using its own accumulated profits or customer deposits to fund the purchase – hopefully the former. Earlier in December, Tether Investments (the arm of the business that deploys its profits) announced it was taking part in a funding round for an Italian robotics company.

Still, regardless of where some of Tether’s deposits are going, it has become a meaningful player in US Treasuries, with its purchases offsetting the amount of US government debt that China has sold over the past three years. US Treasury secretary Scott Bessent has explicitly signalled that he expects stablecoins to become an even larger source of deficit funding for the US government. The US administration believes that dollar-backed stablecoins could appeal most to savers in countries such as Argentina, Egypt or Turkey, where trust in domestic financial institutions is low and people prefer to hold US currency.

Countries with a relatively high adoption of stablecoins already include Ukraine, Turkey and Nigeria – in effect, the population of these countries are funding US deficit spending. Conversely, non-US governments that hope to issue stablecoins in local currency may have missed a crucial point – the underlying demand is for stable US dollar exposure rather than the stablecoin itself.

How will stablecoins work in practice?

While stablecoins seem to be a “safe” asset, they have the potential to threaten financial instability. If billions leave the banking system to fund governments directly, this could raise the cost of funding for banks. No doubt banks would pass on higher funding costs to their borrowers – corporates and households.

Banks may respond to the threat to their deposit businesses by issuing their own stablecoins. They have also lobbied US politicians to prevent non-bank issuers from paying interest to customers or offering other incentives. Ardoino has told The Peg, a stablecoin newsletter, that this would be short-lived. “I’m not sweating at all. Many of these new stablecoins will fail,” he said. “If JPMorgan creates a stablecoin, they will offer the stablecoin to their account holders, who are exactly the people that don’t need a stablecoin.”

There remain several puzzles about how stablecoins will work in practice. Are stablecoins for non-bank customers simply a work-around of AML and KYC regulations? How will issuers like Tether and Circle maintain confidence in the peg to the dollar during a crisis? What constraints limit the supply of stablecoins?

It’s also unclear what problems stablecoins solve for ordinary savers who aren’t interested in using them as a bridge to speculate in cryptocurrencies. Obvious uses include cross-border payments that bypass the traditional bank-based payments system with its high fees. Yet this has already been solved by transfer firms such as Wise.

Stablecoins that pass on interest from their bonds (unlike Tether, at present) could mean that savers earn higher interest rates. However, investment platforms such as AJ Bell, Fidelity and Interactive Investor already report that their most popular products are short-term money market funds that invest directly in government debt.

So with the obvious applications in the developed world already met elsewhere, the demand for stablecoins appears to be coming from unstable parts of the world, as an alternative to keeping physical dollars under the mattress.

Is Tether worth half a trillion dollars?

Tether is seeking to raise $15 billion-$20 billion in funding by selling a 3% stake at an eyebrow-raising $500 billion valuation. The group has signalled net profits for 2025 of roughly $15 billion, so that would imply a price/earnings (p/e) ratio of over 30 times. Tether’s closest rival, Circle, which listed in New York in June, is valued at less than $20 billion, having fallen 70% from its June peak. Nonetheless, it trades on a p/e of almost 70 times forecast earnings for 2026.

UK banks trade on less than 10 times. Arguably, stablecoin issuers offer lower risk than banks, as they don’t take credit risk (ie, they don’t lend to customers) or do maturity transformation (use short-term deposits to make long-term loans). Yet Tether – which is domiciled in El Salvador and operates from the Swiss town of Lugano – does not match its stablecoin one-to-one with US Treasuries. This does not inspire confidence.

We’ve already seen one stablecoin – Terra – collapse, albeit with a different business model to Circle and Tether. Terra was not backed by Treasuries, but instead based on a poorly understood trading algorithm that created a death spiral. Do Kwon, the co-founder of Terra, was last week sentenced to 15 years in prison, with the judge saying he had committed “fraud on an epic, generational scale”.

Given that no bankers in the UK or US faced jail after the financial crisis, perhaps regulators holding management to account is one innovation that could be replicated from stablecoins groups to traditional finance.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Cryptocurrencies will be regulated in a similar way to other financial assets like stocks and shares under new legislation proposed by the UK government on 15 December.

This will mean that companies selling cryptocurrency (‘crypto’) products, including cryptocurrencies like Bitcoin or crypto ETNs that track the prices of cryptocurrencies, will be subject to rules such as transparency standards and other consumer protections.

“By giving firms clear rules of the road, we are providing the certainty they need to invest, innovate and create high skilled jobs here in the UK,” said chancellor Rachel Reeves. Reeves added that millions would receive strong consumer protections thanks to the legislation and that “dodgy actors” would be locked out of the UK market.

Draft legislation to introduce the new rules under the 2023 Financial Services and Markets Act was tabled on 15 December. The Treasury hopes to have the new rules finalised by mid-2026, before going live in the second half of 2027, according to the FT.

The changes mean that “momentum is starting to snowball as we head towards 2026 – which will be the year the UK becomes serious about establishing itself as a genuine crypto hub,” said Nick Jones, CEO of digital asset platform Zumo.

“Many in the industry have been loudly lobbying for the appropriate regulatory framework that will facilitate new avenues of economic growth, so this is very welcome news,” Jones added.

FCA consultation on UK crypto regulations

The UK’s financial regulator, the Financial Conduct Authority (FCA), announced on 16 December that it is looking at regulating aspects of the crypto market for the first time. It aims to strike a balance between facilitating innovation and protecting consumers.

“Regulation is coming – and we want to get it right,” said David Geale, executive director for payments and digital finance at the FCA. “Our goal is to have a regime that protects consumers, supports innovation and promotes trust.”

The FCA is consulting on the proposals until 12 February.

Its consultation will focus on the following areas:

• Admissions and disclosures: ensuring that consumers have sufficient information before investing in cryptoassets.
• Market abuse: ensuring market fairness by preventing insider trading and manipulation.
• Ensuring safe and reliable trading standards on cryptoasset trading platforms and exchanges.
• Requirements for brokers and middlemen to act responsibly when dealing in cryptoassets.
• Ensuring that the risks are clear when firms offer staking (a process where investors can generate returns on their crypto by locking it up for a period of time).
• Lending and borrowing – rules to protect both crypto lenders and borrowers.
• Exploring whether the rules that govern traditional finance should also apply to decentralised finance (also known as ‘DeFi’).
• Prudential requirements: ensuring firms can better manage their risk through appropriate financial safeguards.

“The new laws will bring greater transparency to the sector, keeping bad actors at bay while ensuring consumers benefit from the robust protection they rightly expect from any financial product or service,” said Jones.

There has, until now, been uncertainty over the status of crypto investments in the UK. Complex HMRC rules mean that it could be risky for investors to buy crypto ETNs in a stocks and shares ISA.

In August, former UK chancellor George Osborne warned in an article for the FT that the UK was being “left behind” on crypto.

In 2008, a light aircraft crash-landed into a garden in Highclere, Hampshire. Both the pilot, Christopher Harborne, and the householders counted themselves lucky to have survived. Two years later, in a strange twist of fate, a plane carrying Nigel Farage plummeted to the ground after getting wrapped in a banner it was flying, says the Financial Times. “Both men suffered injuries, both recovered. And both are now trying to overturn Britain’s political order.”

Reform UK’s new mega-donor – a Thai-based aviation entrepreneur turned crypto tycoon – is rarely seen with Farage in public. He keeps a low profile. But long before he coughed up a record £9 million in a donation revealed this week, he had maintained a discreet presence as a key backer of Farage. Ahead of the 2019 European elections, he installed himself in the then Brexit Party’s campaign HQ – ordering in a coffee machine, a supply of gin, tonic and limes, and some “decent tumblers”, says The New Statesman.

UK public support for a hard Brexit that year saw the party, somewhat ironically, become the largest single national party in the European Parliament. Now Harborne is fully behind Farage’s quest to repeat the trick at Westminster. Farage’s big challenge at the moment is fighting claims in the press that as a schoolboy he was a racist bully. But the “slightly geeky” Cambridge engineering graduate sees political problems more as “a mathematical equation that is producing the wrong answer”, says one associate.

Christopher Harborne's early bet on crypto made him a fortune

Harborne, who is in his early 60s, was born in Britain but for more than two decades has lived and worked in Thailand where he has joint nationality and goes by the Thai name Chakrit Sakunkrit. “There’s a romantic side to him,” says one senior Reform member, who describes him as “a merchant adventurer with a great belief in this country”.

But others have questioned the transparency of an international business empire – which now includes a major shareholding in Tether, the biggest stablecoin, and its sister crypto exchange Bitfinex, as well as a sizeable chunk of the UK defence group QinetiQ. Harborne holds some assets in his English name, and others in that of his Thai alter ego.

Last year, he and his aviation fuel company AML Global won a defamation case against The Wall Street Journal for making “false accusations of fraud, money laundering and financing terrorism” in a 2023 article examining companies connected to Tether, says CoinDesk. The judgment noted that “when he became a naturalised Thai citizen, he was required to adopt a Thai name” for legal purposes.

Harborne worked as a consultant with McKinsey in the late 1980s before taking management positions at firms including Walkers and PepsiCo, notes The New Statesman. In 2003, Harborne registered AML Global in Thailand, later forming the Sherriff Global Group, which, among other things, trades private planes. AML would go on to win substantial contracts with the US government. But it was Harborne’s “early bet on cryptocurrencies” that really sealed his fortune, says the FT. He was in at the start of ethereum when it launched in 2014 at about $0.30 per token; that price has now mushroomed to roughly $3,300.

Harborne has his detractors in the Reform movement. Ben Habib – the breakaway founder of the hard-right Advance UK party – was incensed when Harborne gave the Conservative party £1.5 million in 2022 and donated £1 million to Boris Johnson’s private office after he stood down as Tory leader. “I think it’s rotten, Harborne is on every side of the trade.” Still, thanks to his longtime “silent donor”, Farage now has cash in the bag with which to fight the local elections next April, says The Times. “It’s his teenage self he has to beat.”

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Technological improvements have unrecognisably changed much of the global economy in the last 30 years. But one area that remained steadfastly stuck in the past is one of the most fundamental parts of any economy – money. In recent years, however, a financial revolution began. Cryptocurrencies have been with us now for 16 years, but they bring with them a whole host of complexities that only the faithful are willing to overlook. In most cryptocurrencies acolytes lies the spirit of the rebel – somebody who wishes to sit outside the system with their wealth independent of oversight and away from traditional assets. Inevitably, this has roused suspicion that the main benefit of cryptocurrencies is as a cover for nefarious activities.

A different type of cryptocurrency has recently come to light – stablecoins. Where Bitcoin and similar digital currencies aim at tearing down the financial order, stablecoins’ purpose is to improve it. These digital assets, backed by real-world currency, are beginning to act as an important bridge between the traditional financial system and the burgeoning world of decentralised finance. At the forefront of this movement is Circle (NYSE: CRCL), a US-listed financial technology (fintech) business that is positioning itself to be a central player in this new global landscape.

What are cryptocurrencies?

Cryptocurrencies are essentially strings of data that represent value. The key characteristic is that they are fungible, meaning that any one unit is interchangeable with any other, just as a pound coin is equal in value and function to any other pound coin. The magic that makes these digital assets secure lies in the blockchain, a development that became possible with the internet.

A blockchain is a decentralised digital ledger, a record of all transactions, that is maintained across a vast network of computers rather than being held by a single central authority, such as a bank. To understand its power, consider the traditional system of double-entry book-keeping. When you send money to someone, both you and the recipient keep a record of the transaction. A bank acts as a trusted, private third party to ensure that both records match.

The blockchain introduces a different third party outside of the private banking system. The radical idea was that the confirming party in transactions was to be a public record, open to be seen and verified by anyone. Every transaction is recorded in a “block” of data and, once that block is verified by the network, it is added to a permanent, immutable chain of previous blocks – thus creating a blockchain. This open, unchangeable record is what makes the assets on a blockchain truly unique and resistant to fraud, as it removes the need for a single, central authority. Imagine a contract between two parties. Then imagine that this contract only becomes valid once the whole world can see it and it thus only becomes legal if everyone agrees. That is the essence of the blockchain.

The difference is that a contract is a unique, non-fungible asset. Because cryptocurrencies are fungible, they can be used to facilitate secure, peer-to-peer transactions without a middleman such as a bank. That is the fundamental idea behind the original cryptocurrencies such as Bitcoin.

The rise of stablecoins

The older digital currencies grabbed headlines due to their volatile price swings and the vast wealth they created for the mavericks who saw the potential early. Stablecoins may prove a more practical innovation. As the name suggests, they are digital assets specifically designed to maintain a stable value, and their value is typically pegged to a fiat currency such as the US dollar or the euro. There are different types of stablecoins, each with a different mechanism for maintaining their peg.

The most common and trusted type is the fiat-backed stablecoin, such as Circle’s USDC. The mechanism is simple: for every digital token created, an equivalent amount of a real-world asset is held in a reserve account. This backing provides trust and stability, ensuring the stablecoin can always be redeemed for its real-world dollar equivalent. Crypto-collateralised stablecoins, such as MakerDAO’s DAI, are backed by volatile cryptocurrencies and use extra collateral to manage risk. Algorithmic stablecoins, such as the failed TerraUSD, rely on complex programs to maintain their value, but can collapse. The recent public failures of algorithmic coins have highlighted the importance of transparent, asset-backed models such as Circle’s.

Circle, formerly Circle Internet Financial, is a prominent US-listed fintech business that has made this model its core mission. Its flagship product is the USD Coin (USDC), but it has since expanded to include the EUR Coin (EURC). The company was founded in 2013 and initially focused on Bitcoin payments before making a strategic pivot to stablecoins. Circle’s history is defined by its commitment to working within the existing financial and regulatory system. From its early days, it actively pursued regulatory approval around the world. It secured key licences in New York, the UK and Singapore.

This dedication to compliance has set it apart. By actively seeking regulatory clarity from the outset, Circle has positioned itself as a trusted partner for financial institutions and businesses. Unlike many of its competitors, rather than trying to replace the financial world order, it is trying to fix it. This is in stark contrast to its main rival, Tether and its USDT coin. Historically, Tether has operated with less transparency and a more decentralised approach, often drawing intense regulatory scrutiny. Tether remains the larger stablecoin by value of currency in circulation, but Circle’s strong focus on trust and following the rules has helped it grow quickly. Because of this, many large investors and businesses see it as a safe and reliable way to enter the world of digital assets.

Circle's new financial infrastructure

Beyond simply providing a digital dollar or euro, Circle is building a new financial infrastructure. This is where the concepts of the off- and on-ramp become critical. The on-ramp is the process of converting traditional currency into a digital one, such as moving dollars from your bank account to a crypto exchange to buy USDC. The off-ramp is the reverse. Currently, these two steps can be a barrier, often involving fees and delays. But the true power of a stablecoin system could lie in a frictionless future where on-ramping and off-ramping are less frequent. Once an individual or business holds their currency in a stablecoin such as USDC, they can transfer it to anyone else in the system instantly, at nearly no cost, and at any time of day. This “always-on” payment rail will bypass the traditional banking system and its associated fees.

This is already happening – in international remittances, for example, where a USDC transfer can take seconds and cost fractions of a penny. This stands in contrast to the traditional system, which can cost upwards of £20 and take several days. In a world of mass adoption, one could even receive a salary in stablecoins, then use them to pay for groceries or bills, all within the same digital system, unlocking a cheap, frictionless, financial life. Circle has actively pursued partnerships with major financial players such as Visa and Fiserv to turn this vision into a reality. These collaborations will allow traditional finance firms to integrate Circle’s technology, helping to bridge the gap and accelerate the adoption of USDC.

Most of Circle’s income comes from the interest it earns on the money that backs its stablecoins. Each USDC and EURC is supported by cash and short-term government bonds, which together provide a steady source of earnings. How much Circle makes depends mainly on two things: current interest rates and how many of its stablecoins are in use. It’s an attractive model, but not without its risks. In a high-interest-rate environment, the firm’s profitability soars. In a rate-cutting world, however, Circle’s revenue from this source would be directly affected.

Acknowledging this dependency, Circle is diversifying its income by offering a suite of software services and customisable interfaces that help businesses integrate stablecoins into their own operations. This includes its Circle Payments Network (CPN), which provides a transaction-based revenue stream that is less sensitive to interest-rate fluctuations. At present, these are small parts of Circle’s business, but they have the potential to become more important as the firm grows.

What the future holds with Circle

Circle’s strategy of working with regulators positions it to be centrally important to an emerging global financial framework. This is no longer a theoretical possibility, especially given the recent passage of the Guiding and Establishing National Innovation for US Stablecoins, or GENIUS, Act. This new US law is the first to set clear national rules for stablecoins. It says that only approved companies can issue them and that they must follow strict rules to protect users and remain transparent. Every stablecoin must be backed one-for-one with safe assets such as cash or short-term US government bonds. Circle has followed this approach from the start and proves it through public reports. The GENIUS Act is a big deal for a company like Circle. Many other stablecoin makers will find it hard to follow these strict new rules, but Circle’s business model was already set up to meet them. This new law provides the clear rules that banks, tech companies and large businesses need. They can now use stablecoins with confidence because the law removes the legal doubts that stopped widespread use before. Additionally, the Act bans stablecoins that don’t follow the rules and sets clear guidelines for foreign companies. This will probably make Circle’s USDC even stronger as a trusted, regulated choice in the market. It punishes companies that don’t meet this new “gold standard”.

By building a trusted, compliant infrastructure, Circle is not simply creating a new cryptocurrency. It is also helping to lay the groundwork for a stablecoin-powered financial system that could one day become the backbone of global commerce. In the process, it has the potential to make the company enormously profitable. The traditional banking world is on notice: the future of finance is here, and it is built on a foundation of stable, digital money.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Our annual conference, which this year coincided with the magazine’s 25th birthday, was a roaring success. For those who weren’t there, here is an overview of what you missed. Andrew opened proceedings by noting that the magazine’s quarter-century was bookended by two huge technology booms, while the years in between had seen extraordinary events ranging from a financial crisis to a pandemic.

The only thing it hadn’t seen was a normal business cycle, thanks to constant interference in economic cycles and economies by central banks. Calderwood Capital’s Dylan Grice underlined how state meddling was a recurrent theme – well-intentioned efforts to regulate the market only deepened the crises leading to the American and French revolutions. Throw in today’s geopolitical, technological and financial uncertainty, and extreme caution is called for.

Diversify as follows, he says: construct an equally weighted portfolio comprising equities, commodities, precious metals, real bonds, nominal bonds and securities offering exposure to insurance and reinsurance, such as CAT bonds.

The panel following Dylan’s speech, hosted by MoneyWeek’s columnist Rupert Hargreaves of City A.M. and consisting of Jasmine Yeo of Ruffer, Troy Asset Management’s Charlotte Yonge, RIT Capital Partners’ Frank Ducomble and Charlie Morris of ByteTree, highlighted the scope for gold, bitcoin and index-linked bonds to shield investors’ holdings. Charlie said he was convinced that AI is a massive bubble that peaked in late October.

MoneyWeek Wealth Summit highlights

The emphasis then switched to long-term growth opportunities. Enter Vietnam, which has been one of our favourite stock markets since 2005. Dominic Scriven of Dragon Capital says the economy is growing at 7%-8% a year. Exports have moved up the value chain from raw materials to electronics, and consumption is rising. The pro-business Communist government is sacking one million civil servants to make the public sector more efficient.

Japan, meanwhile, is making its private sector more efficient. Nicola Takada Wood of AVI reviewed the progress of the campaign to shake up corporate governance and unlock value. AVI has been a key activist investor in the under-researched small-cap segment of the market. There is still room for improvement – a large majority of the firms trading below book value in the market are small caps.

Ben James of Baillie Gifford focused on AI. It is the latest technological revolution in a series that began with the industrial revolution, the last one being information technology. We are in the early phase of the machine era, and a key theme will be robotics, with robots doing manual tasks everywhere. In this context, Aurora, an unmanned truck group, and Tesla’s robots have caught Baillie Gifford’s eye.

Next we heard from India Capital Growth Fund’s Gaurav Narain. India continues to exhibit robust growth of about 6% a year, powered by a young population’s household spending – the median age is 28. The stock market remains buoyant, too, accounting for a third of flotations worldwide.

A lunchtime discussion about gold was led by Cris Heaton, who quizzed James Proudlock of OptionsDesk and Erik Norland of CME Group. A snap poll of the audience afterwards was bullish.

After lunch, our founding editor, Merryn Somerset Webb, now at Bloomberg, reviewed the lessons of MoneyWeek’s 25 years. Two of them were that diversification and mean reversion always matter. And hold gold.

Then Laura Foll of Janus Henderson explored the perennial problem of the British stockmarket withering away, with former MoneyWeek editor John Stepek, also now at Bloomberg. The market’s overall valuation is in line with its long-term average, while small and mid caps still look cheap. Foll highlighted commercial property as an area unlikely to become obsolete as technological advances gather pace.

Diana Choyleva of Enodo Economics has become more positive on China in the past few years. There is scope for a bull market now that the government is trying to encourage people to hold stocks rather than property. Pantheon International’s Charlotte Morris reminded the audience that privately held companies outnumber listed companies threefold, so it is important to have exposure to private equity. The same goes for healthcare, according to James Douglas of Polar Capital. The pace of innovation remains impressive and demand robust – concern over the Trump administration’s capricious health policies has eased and valuations are appealing.

The afternoon panel, focusing on diversifying beyond the US and its AI-driven tech stocks, along with the relative merits of small and large caps, was hosted by MoneyWeek’s columnist David C. Stevenson. David was joined by Martin Connaghan of the Murray International Trust, Simon Barnard of the Smithson Investment Trust and Swathi Seshadri of MCP Emerging Markets. Value lies beyond the US, while Simon Barnard noted that the AI boom may be like the railroad one – more useful to future users than the original investors.

Following Dr Pippa Malmgren’s riveting explanation of how stablecoins could remodel the global financial order, MoneyWeek’s funds columnist, Max King, finished the conference by reminding readers to stay optimistic and recall that sometimes value stocks were cheap for a reason. The FTSE 100 should soon reach 10,000, he said. This week, it is tantalisingly close.

Thank you to our headline partner Aberdeen, event partners India Capital Growth Fund, OptionsDesk, Polar Capital, QuotedData, RIT Capital Partners, Smithson Investment Trust and Vietnam Enterprise Investments; and association partner The Association of Investment Companies for their support.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Adding crypto exchange-traded notes (ETNs) could add a significant layer of risk to your portfolio, after HMRC confirmed investors would only be allowed to hold the assets in a stocks and shares ISA for six months.

The Financial Conduct Authority (FCA) lifted the ban, which had been in place since January 2021, to sell crypto ETNs (cETNs) to retail investors last month. Crypto ETNs are an instrument that tracks the price of cryptocurrencies like Bitcoin or Ether without requiring direct ownership of these assets.

On the day the ban was lifted, HMRC confirmed that crypto ETNs could be bought and held in a stocks and shares ISA.

But there is a catch. The rules state the option would only be available for six months, after which you must move your crypto holding to an Innovative Finance ISA.

"Given the innovative nature of cETNs, and the fact this is an emerging market, the government has decided to limit their inclusion to the Innovative Finance ISA," HMRC told MoneyWeek. "This strikes a balance between extending investor choice and managing risk responsibly."

But as it stands, the complex rules could increase the risk around cETNs, because buying them into your stocks and shares ISA now could leave you exposed to extreme volatility when you are forced to sell and move your holdings.

What has HMRC said about holding cETNs in ISAs?

HMRC announced on 8 October that cETNs would be eligible to be held in a stocks and shares ISA between 8 October 2025, when the ban on sale of cETNs to retail investors was lifted, and 6 April 2026.

From April, cETNs will no longer be able to be bought in a stocks and shares ISA. Instead, they can then only be bought in an Innovative Finance ISA (IFISA). These are a much rarer product.

The latest data available shows that there are around 17,000 IFISAs in the UK, compared to over 3.8 million stocks and shares ISAs.

“In terms of amounts subscribed to ISAs, it’s mostly cash and stocks and shares,” said Viktor Nebehaj, CEO and co-founder of FreeTrade. “Innovative Finance ISAs are a rounding error.”

What wasn’t clear at the time was what would happen to cETNs bought into a stocks and shares ISA now, that were still there on 6 April. But HMRC has this week confirmed that any such holdings would have to be liquidated – in other words, sold off at whatever the market price happens to be at the time.

An HMRC newsletter published 4 November confirms:

From 6 April 2026, cryptoasset Exchange Traded Notes may only be held in an Innovative Finance ISA. Where the ISA manager is not approved to offer the Innovative Finance component they must either be:

• removed from stocks and shares ISA
• liquidated

Cryptocurrencies are volatile. Investors looking at the price increases they have notched up over the last decade could make a very strong case for holding them as a long-term investment, or especially as a potential hedge against inflation (particularly alongside gold).

But that is impossible to do if there is a set date in the future where investors will be forced to sell. If crypto markets happen to be enduring a downturn during April, any investors that have bought a cETN into their stocks and shares ISA following the lifting of the ban will be forced to sell their holdings and crystallise any losses they have incurred in the meantime.

“HMRC’s current guidance on crypto ETNs is not logical to me,” said Nebehaj. “As it stands, customers are able to buy these assets in their stocks and shares ISA, but after the tax year, they will be forced to sell or transfer their crypto ETNs into the obscure and little-used Innovative Finance ISA.”

“People can choose to invest in cryptoasset Exchange Traded Notes through their registered pensions or stocks and shares ISAs,” said an HMRC spokesperson. “Changing ISA rules takes time because it involves careful drafting, industry engagement, while following Parliamentary procedure. We’re working quickly to introduce these changes by April 2026.”

Will you be able to buy crypto ETNs in stocks and shares ISAs in future?

Anyone buying a crypto ETN at the moment has to consider the tax implications. Either they will have to hold the investment outside of a tax-efficient ISA, exposing the investment to CGT, or they will need to be ready to switch their holdings out of a stocks and shares ISA and into a IFISA in April – if, that is, they are among the handful of Brits who actually have an IFISA.

Of course this begs the question of why HMRC is making things so complicated for UK investors.

“The ISA framework is in need of simplification as is, but perpetuating Innovative Finance ISAs this way creates uncertainty for investors who have waited to get spot crypto exposure in their brokerage account,” said Nebehaj.

HMRC has confirmed that it is consulting with relevant industry figures on potentially restoring stocks and shares ISA eligibility in the future.

An HMRC spokesperson said that the government will keep the inclusion of cETNs 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.

Rather than tinkering with the rules, though, Nebehaj has called on HMRC to stick to a simple approach. “Luckily there’s a simple fix: just do nothing,” he said. “The stocks and shares ISA rules [currently] permit cETNs.”

What are crypto ETNs?

ETNs are similar to exchange-traded funds (ETFs), but they are debt-linked assets that track the price of a specific asset. In the case of cETNs, that asset is a cryptocurrency.

Brits are increasingly incorporating crypto into their financial planning and investing strategies. Charlie Morris, chief investment officer at ByteTree Asset Management, argues that it has become the reserve currency of the internet.

Research from broker Bitpanda shows that 6.5 million Brits now hold crypto investments. More than one in five (22%) of these hold crypto as a hedge against inflation and economic instability, and the same number view crypto as a legitimate long-term investment.

“Crypto is no longer just for early adopters,” said Pantelis Kotopoulos, UK country lead of Bitpanda. “People are exploring it alongside more traditional options, not to replace them, but to diversify their financial position and navigate an increasingly volatile economic environment.”

One of the main appeals of cETNs for exposure to crypto price movements is that they could, theoretically, be held in an ISA. That would make them exempt from capital gains tax (CGT).

But HMRC’s complex application of the ISA rules exposes any investors seeking to do so to the short-term volatility that typifies crypto markets.

Throughout the ten years to 2025, Bitcoin was the world’s best-performing asset.

In dollar terms the price of Bitcoin, the world’s largest cryptocurrency, increased by almost 27,500% between 10 November 2015 and 10 November 2025.

Analysis from VanEck shows that Bitcoin has been the best-performing asset in eight of the last 11 years, with returns of over 35,000% in the 10 years to 30 June 2025.

According to analysis from crypto exchange Kraken, £1,000 invested in Bitcoin 10 years ago would be worth over £362,000 today.

Despite these gains, Bitcoin is a volatile asset, which adds to its perception as a risky investment.

Bitcoin fell from an all-time high price of over $126,000 on 6 October to below $100,000 less than a month later – a decline of 21.7% from peak to trough.

The price of Bitcoin is staging a recovery from these recent declines, having gained 2.7% to around $106,460 in the five days to 10 November, but over the past month Bitcoin has fallen 12.7% in dollar terms.

“As adoption deepens and regulation matures, Bitcoin is increasingly viewed not as a speculative trade, but as a structural component of modern portfolios,” says Thomas Perfumo, global economist at Kraken.

Some argue that Bitcoin is the money of the future, and that it has already become ‘the reserve currency of the internet’. But with many viewing Bitcoin as an inherently value-less asset, what drives its price movements, and should you invest in Bitcoin?

What is the investment case for Bitcoin?

Bitcoin has scarcity built into its design. A maximum of 21 million Bitcoins will ever be mined, and the rate at which new ones enter circulation halves approximately every four years (in an event known as the Bitcoin ‘halving’).

Around 17 November 2025, Bitcoin’s circulating supply will cross 19.95 million coins – 95% of its maximum possible supply.

“Programmable scarcity, coupled with predictable issuance and decentralised design, sets Bitcoin apart from competing forms of money and asset classes,” says Perfumo.

This scarcity, in theory, enables Bitcoin to act as a hedge against inflation that results from the inevitable debasement of fiat currencies.

“In the short term, Bitcoin's market price fluctuates with macro conditions that drive global markets, business cycles, liquidity trends, and investor sentiment,” says Perfumo. But over the long term he views that its design, permissionless access and increasing global adoption adds to its inherent value.

“It remains a natural hedge against fiat debasement and one of the few credibly neutral, globally accessible stores of value,” added Perfumo.

There is also an argument that Bitcoin can act as a diversifier in portfolios. Whilst this makes sense in theory, Bitcoin price movements are sometimes correlated with movements in US equity markets.

Data from newhedge shows that throughout 2025, Bitcoin prices have at times been negatively correlated with the S&P 500 (especially during June) but for most of the year they have had a reasonably strong positive correlation (often above 0.8, with 1 being perfect correlation) with the index.

Should you invest in Bitcoin?

Bitcoin is a divisive asset, and tends to provoke either strongly positive views from bulls who are ‘all-in’ on cryptocurrencies, or skeptics who steer well clear.

There is a middle ground between these extremes that sees Bitcoin as an asset that potentially has a role to play in a balanced portfolio just like any other.

One balanced approach might be to weight your Bitcoin exposure based on the rest of the market. Digital assets now account for 1.7% of the global listed market portfolio, as of 31 August 2025, and Bitcoin accounts for 56% of crypto market capitalisation.

Dovile Silenskyte, director of digital assets research at WisdomTree, argues based on this that allocating around 2% of your portfolio to Bitcoin is rational.

“Zero exposure is not caution, it is an active underweight against a quickly growing asset class,” said Silenskyte. “A measured 2% allocation has historically lifted returns while barely budging volatility.”

Silenskyte cited WisdomTree research that found a 2% Bitcoin allocation within a 60/40 global portfolio added 1.3% annual return for just 0.19% added volatility.

However, any investment decision should be made with consideration of the risks involved, your own personal circumstances and goals, and, if possible, in consultation with a financial adviser.

How to buy Bitcoin

The most basic means of gaining exposure to Bitcoin prices is to buy Bitcoin directly into a crypto wallet. This might require creating a specialised exchange such as eToro, Coinbase or Bitpanda. Note also that Bitcoin cannot be held in an ISA or a Sipp, so profits would be subject to capital gains tax (CGT).

You could buy a Bitcoin ETN (exchange-traded note) into a stocks and shares ISA – but note that you will be forced to sell any holdings here on 6 April (or move them into an Innovative Finance ISA, if you have one). A Bitcoin ETN works much like an exchange-traded fund (ETF), but it is a debt instrument that tracks the price of a particular asset, in this case Bitcoin.

There are no other means of gaining direct Bitcoin price exposure in a stocks and shares ISA, but you can gain some indirect exposure through crypto stocks such as Coinbase (NASDAQ:COIN) or a crypto ETF such as the Invesco Blockchain ETF (LON:BCHS). Funds like this tend to hold a selection of stocks that leverage or otherwise benefit from blockchain technology, which includes cryptocurrencies like Bitcoin.

“History is just one f**king thing after another,” declares a vulgar schoolboy in Alan Bennett’s play The History Boys. Surveying the past 25 years can feel the same way. From Iraq to the euro crisis and from Brexit to bitcoin, a great deal has happened over the quarter-century that MoneyWeek has graced newsstands. But not all news stories are created equal.

Hazarding a slightly more elegant periodisation than Bennett’s character, I would argue that the great turning point of the past quarter-century was the financial crisis that began in 2007. For the UK in particular, recent history can be neatly sliced into two periods: the years before and after the great crash.

London loses its crown

In the early 2000s, London could credibly claim to be the centre of global finance. It topped Z/Yen’s inaugural Global Financial Centres index (GFCI) in 2007.

America might be the superpower, the argument went, but London was the world’s capital. Britain’s economy was like the tennis at Wimbledon, a venue for global heavyweights to clash, helped by the English language and an excellent time zone.

The past is indeed a foreign country. Where once the “Sir Humphreys” in Whitehall talked of surpassing New York, today they tremble at unflattering comparisons to Greece. The London stock exchange fears irrelevance. Nvidia alone, valued at $5 trillion, dwarfs the combined value of all London’s blue chips. Deal volume has never regained its 2006 peak of $51 billion (it was just $248 million in the first nine months of this year).

While the technology megabucks fly on Wall Street, one of London’s most notable listings this year has been Princes Group, a purveyor of tinned tuna. It is a perfectly respectable business, but there is a certain desperation in efforts by officials to tout this solid, dull flotation as heralding some great renaissance.

Most tellingly, UK living standards have flatlined since 2007. “[Had the] pre-2007 productivity trend continued, British workers would be 16% more productive today,” says Aadya Bahl on an LSE blog. The significance of 2008 is much more evident in Britain than in America, where growth eventually recovered. The S&P 500 index of US stocks has rocketed nearly 900% since its 2009 low (compared with 153% for the FTSE 100). The UK had placed all of its chips on the wealth generated by the City.

When that bet imploded, the country struggled to carve out a new role for itself. Ever-Tiggerish, Americans bounced back from the banking disaster, reinventing themselves as shale-oil prospectors and smooth-talking tech venture capitalists; Britain has more resembled a middle-aged man bouncing between odd jobs after an involuntary redundancy.

Far too easy money

Gordon Brown’s hubristic claim to have abolished “boom and bust” was widely panned as the Great Recession got underway. But in this, the chancellor-turned-PM was only mirroring the wider economic establishment, where the notion of a “Great Moderation” (built on the supposed inflation-fighting genius of central bankers) was all the rage.

Central banks treated us to further financial wizardry after the subprime meltdown by unleashing ultra-low interest rates and the money-printing of quantitative easing (QE). More tranches were added whenever markets started to feel queasy. By the peak in 2021, the Bank of England’s QE portfolio had swollen to £895 billion, or 40% of UK GDP. Contrary to the worst fears, inflation did not immediately rocket. What happened was more insidious.

With credit all but free, risky behaviour went unchecked for years. On Wall Street, the era of ultra-low rates led to some truly daft companies and unworkable business models. The most notorious was WeWork, a poorly run office landlord that somehow convinced venture capitalists it was a ground-breaking tech innovator. Investors threw tens of billions at the idea before it filed for bankruptcy in 2023.

The impact on governments’ behaviour was even worse. Easy money anaesthetised bond markets, removing pressure on states to get spending in order. Although not openly admitted, this was by design. The hope was that cheap borrowing costs would prompt governments to borrow and spend more, thus ending the world economy’s post-crisis slump.

Governments binge on debt

It took a pandemic for the balance of global savings and borrowing to shift decisively. Anyone wondering why interest rates and inflation have spiked so violently of late need look no further than the world’s finance ministries. With furlough schemes, governments got out the credit card, treating tens of millions of workers to a year off. Then came the energy shock after Russia’s invasion of Ukraine in 2022, combined with a pressing need to find more money for defence and an ageing population.

The result has been an explosion in public borrowing. In 2000, UK public debt stood at 37.7%. Today it is 103%, with the Office for Budget Responsibility warning that on the current trajectory it will hit 270% of GDP by 2070. It’s a similar story in most of the developed world.

The mirror image of worsening government credit has been surging gold prices. The yellow metal started the year 2000 at $289 an ounce (oz). Today it trades at $4,035/oz. That 1,294% gain arguably makes it the trade of the century so far, far outstripping the S&P 500’s 365% return over the same period. MoneyWeek is a great fan of the yellow metal, but even we must admit that at current levels, vertigo is setting in.

Bitcoin fanatics will argue that theirs is the trade of the millennium. MoneyWeek has been cautious about embracing the highly volatile cryptocurrency. Claims that bitcoin is “digital gold” are suspect. Bitcoin tends to behave more like a risky asset, rising and falling together with frothy tech stocks, than it does a hedge.

Yet our scepticism is proving hard to maintain. Since its first boom in 2017, the digital currency has gone on to return over 500%. Modish “meme” coins can do even better. Investing is about growing and preserving pre-existing wealth, rather than making a fortune from nothing. Yet pick the right meme coin and you can become wealthy overnight. Still, a lottery ticket can also do that for you.

So much for peak oil

Gordon Brown’s talk of ending boom and bust is far from the only dubious prediction over the past 25 years. During the 2000s, looming “peak oil” was a persistent worry due to the depletion of existing reserves. Credible estimates predicted that production would peak sometime around the late 2000s, before plummeting. Oil prices did in fact rocket at the end of the decade, rising from $30 a barrel in April 2004 (when MoneyWeek suggested readers buy) to more than $140 a barrel in 2008 (shortly before it told readers to sell).

Yet peak oil was not to be. All of that talk of coming shortages only prompted capitalists to go out and find more. In the 2010s, Texan cowboys flooded world markets with shale. Today, peak production is thought to be likely to occur in the early 2030s.

Peak oil was overdone, but the warning that energy was set to become more scarce has proved accurate. As cheaper production sources were exhausted, more marginal reserves such as shale require a higher price point to be economical. At $64 a barrel, Brent crude prices trade at a level regarded as cheap by current standards. But that is still much higher than its $29 a barrel of November 2000.

Emerging markets diverge

MoneyWeek was launched just as emerging markets (EMs) were gathering steam. The first decade of the 2000s was a golden era for developing economies, as China entered the World Trade Organisation, and Asia and Russia recovered from financial crises. From January 2001 to the end of 2009, EM equities gained 200%, compared with a measly 4% in developed markets. The rise of EMs has remained a vital theme, but one that proved messier than expected.

For one thing, growth has had a frustrating tendency to fail to translate into equity gains. The EM index has returned a paltry 28% since the start of 2010. Leadership of the complex has narrowed as Brazil, Russia and South Africa variously stagnated.

Yet defying repeated predictions of an imminent “China crisis”, China has kept on growing, although the recent property bust is proving the most serious test yet. Many developing economies become trapped at the “middle-income” level, defined as GDP per capita of between $1,000 and $13,800. With GDP per head of $13,300 as of last year, China finds itself on the cusp of joining the world’s high-income economies.

Since Covid, the world’s second-largest economy has emerged as a global leader in electric cars and AI. This has not made for very exciting investment returns (the CSI 300 index is still 13% off the level it reached at the height of an investing mania in 2015). But as geopolitical facts go, none is more fundamental to the future than the Middle Kingdom’s growing power.

Don’t buy at the top

Other popular narratives today may also ultimately prove wide of the mark. Tech leaders in Silicon Valley are currently warning that automation could lead to a jobless future, while simultaneously worrying that low birth rates will starve the economy of working-age people. The future, they incoherently claim, is one of both mass unemployment and a chronic labour shortage. Both problems can’t be true at once.

What about Britain? Trying to be optimistic, one might argue that pessimism has reached such an extreme level that it won’t be very hard for growth to surprise on the upside. The FTSE 100 has returned a decent 75% over the last five years.

Yet its performance this century has been dire. Up 52% since MoneyWeek launched, the blue-chip index has given investors a measly annualised return of 1.75% over 25 years (generous dividends on top do soften the pain of sluggish capital growth, though). Measure from the 2003 low, and the index has returned 165%.

No country knows more about investing misery than Japan, one of MoneyWeek’s long-standing favourites. Last year, the Nikkei index regained its 1989 peak; it took 34 gruelling years. The Topix share index has returned 275% since 2013, when Shinzo Abe launched economic reforms, but getting there has involved a long and painful wait.

The investment industry is fond of reminding us that over the long-term stocks tend to deliver an attractive rate of return. Yet that is an average. As grinding returns in the UK and Japan have shown, if you buy near the top, your portfolio’s recovery time risks being counted in decades. Those currently going all-in on the US tech frenzy have been warned.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

History may merely rhyme, rather than repeat itself, but it certainly often offers a neat sense of symmetry. When this magazine launched on 4 November 2000, air was hissing loudly out of the dotcom bubble. Today, with MoneyWeek’s 25th birthday imminent, stock markets are once again indulging in a bout of exuberance, possibly irrational, over a new technology. Meanwhile, globalisation and the liberal internationalist world order are being eclipsed by mercantilism and military conflict, while growth has stagnated in much of the developed world.

This is the context in which we are holding Turmoil, tariffs and Trump 2.0, this year’s annual wealth summit on 7 November. After an introduction from MoneyWeek editor Andrew Van Sickle and summit host Dominic Frisby, keynote speaker Dylan Grice of Calderwood Capital will focus on the challenges of this “high signal” environment, before we look at how to get to grips with the risks.

First, MoneyWeek columnist Rupert Hargreaves will lead a discussion among four top multi-asset investors: Charlotte Yonge of Troy Asset Management; Charlie Morris of ByteTree; Frank Ducomble of J. Rothschild Capital Management; and Jasmine Yeo of Ruffer. They will explore the role of stocks, bonds, gold, crypto and more in protecting and growing your portfolio.

Then the agenda become more optimistic, reflecting the fact that for all the world’s intractable problems, there is always money to be made somewhere. Enter Dominic Scriven of Dragon Capital, who will make the case for Vietnam, which has been one of our favourite markets since 2005. Another of our favourites is Japan, and Nikola Takada Wood of Asset Value Investors will outline the corporate governance revolution there.

Baillie Gifford has a knack for finding outstanding growth, so who better than Ben James from the US Growth Trust to tell us how AI could reshape the world. There is also ample scope for long-term gains in India, the world’s fourth-largest economy, as Gaurav Narain of India Capital Growth Fund will explain.

MoneyWeek has liked gold since 2001 – but after the recent surge, are we near the end of the bull market? Gold experts Erik Norland of CME Group and James Proudlock of OptionsDesk will be the guests of contributing editor Cris Sholto Heaton for our lunchtime discussion. Meanwhile, some of our speakers will share their personal investing experiences with Kalpana Fitzpatrick, our digital editor, during the coffee breaks.

MoneyWeek Wealth Summit: afternoon sessions

After lunch, former editor John Stepek will discuss how to tackle the ongoing malaise in the UK stock market with Laura Foll of Janus Henderson and Law Debenture, before Charlotte Morris of Pantheon International explores opportunities in listed private equity. Gareth Powell of Polar Capital will then look at structural tailwinds for healthcare.

Our columnist David C. Stevenson will hear from Carlos von Hardenberg of MCP Emerging Markets, Martin Connaghan of Murray International Trust and Simon Barnard of Smithson Investment Trust about the global outlook. Are small caps and emerging markets set to rally after years in the shadow of US mega caps?

Many of our guests run investment trusts. These are our favourite type of fund – they tend to outperform open-ended funds and offer a better structure for holding illiquid and volatile assets. We expect volatility in the years ahead, and the ability to tolerate it will matter.

The afternoon will also see Merryn Somerset Webb, MoneyWeek’s founding editor, reflect on lessons from the past 25 years. China expert Diana Choyleva will explain how Beijing aims to reshape the world as it competes with the US. Economist, entrepreneur and award-winning author Dr Pippa Malmgren will argue that stablecoins could revolutionise the financial system in our afternoon keynote. MoneyWeek columnist Max King will wrap up with thoughts on why gloomy British investors should be more like optimistic Americans.

We hope to see you there – see moneyweekwealthsummit.co.uk for more details and to register. Thank you to our headline partner, Aberdeen; event partners India Capital Growth Fund, OptionsDesk, Polar Capital, QuotedData, RIT Capital Partners, Smithson Investment Trust and Vietnam Enterprise Investments; and association partner The Association of Investment Companies for their support.

Rob Granieri is “the last founder standing” at Jane Street – “the black-box money machine” currently “minting Wall Street records”, says Bloomberg. But he’s almost impossible to pin down – guarding his “low-key stature” so tightly that he often goes unrecognised, even in his own company, where he officially has no title. His profile in the employee directory stands out for its missing headshot.

If you want a sighting of the “schlubby” billionaire recluse, you’re better off looking beyond Wall Street. The “soft-spoken libertarian” is most at home at alternative gatherings: notably that “mecca of counterculture”, the Burning Man festival. Another favoured haunt is the Scarlet Pearl casino in Mississippi’s Biloxi Bay – a family affair he helped build and finance.

Still, “invisibility has grown harder to maintain” as Jane Street’s profits have exploded, says the New York Post. The firm, which some have dubbed the world’s most lucrative trading house, has enjoyed such breakneck growth over the past five years – at the vanguard of the exchange-traded fund boom – that it accounted “for nearly a quarter of all US-listed ETF trading volume last year”. “The amount of money they make is almost obscene,” one former analyst told the Financial Times, which describes the “quirky and opaque” outfit, renowned for spotting arbitrage opportunities, as one of the “new titans of Wall Street” – frequently trouncing establishment rivals. Jane Street’s $21.9 billion trading revenues in 2023 were “equivalent to roughly one-seventh of the combined equity, bond, currency and commodity trading revenues of all the dozen major global investment banks”. The arrival of bitcoin ETFs the following year put another rocket under revenues. As of June this year, it had already pulled in $17 billion.

Granieri, now 53, always “harboured ambitions to make a lot of money”, says Bloomberg. After graduation in 1992, he printed a stack of CVs and dropped them off on each floor of Philadelphia’s tallest buildings. The strategy worked. He scored a job at Jeff Yass’s Susquehanna International Group, “the quant-trading firm that was quietly becoming a market behemoth,” and was soon pulling in $700,000 a year. But, itching for change, he teamed up with two other traders to form the firm that became Jane Street in 1999.

Rob Granieri: into the limelight

Being dragged into the limelight by success is one thing. Sadly for Granieri, Jane Street is increasingly under scrutiny for other reasons, too. Most serious, says Bloomberg, is an accusation by the Indian regulator of “rigging the world’s largest options market”, which the firm has vowed to fight. The collapse of Sam Bankman-Fried’s FTX crypto exchange, and subsequent high-profile fraud trial, also shone unwelcome light on the firm’s culture – “SBF” spent his early career there, personally recruited by Granieri. “Having Jane Street on the CV was a crucial bit of Bankman-Fried’s sales pitch,” notes the FT. Yet the lax office vibe at FTX was a partial mirror of Jane Street’s, where Granieri “has inculcated a culture that mirrors his quirks”, says the New York Post.

The wider worry, says the FT, is that Jane Street’s “tight-knit” corporate culture no longer fits its size and global clout. The firm is run by roughly 40 equity partners with no traditional management structure: a recipe for a lack of accountability, say critics. Much depends on the outcome of the Indian investigation. The worse-case scenario for the firm is that “the temporary block on activities” imposed there could spread to other jurisdictions as regulators dig deeper. One of Granieri’s few personal indulgences is fine dining. Why cook, he jokes, when you can “eat at Le Bernardin every night”? Given his woes, he could be forgiven a spot of comfort eating.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Digital currencies (cryptocurrencies) have moved from the outer fringes of investing into the mainstream in recent years. While it’s been a roller-coaster ride for investors, crypto is here to stay. Governments and regulators progressed from ignoring it to fighting it; now they are trying to jump on the bandwagon by allowing investors access through exchange-traded funds (ETFs). However, while bitcoin might not be in a bubble, some of the companies involved in it are.

Chief among these is the group of companies known as bitcoin treasury companies. These firms’ business models involve buying a load of bitcoins and holding them on their balance sheets in the hope that investors will be willing to value their shares at a premium to the value of the bitcoin. They would then promise to take advantage of this premium to issue more shares, which could be used to buy more bitcoin, in the hope that those who invested would see the bitcoin per share holdings increase.

Trouble ahead for bitcoin treasury companies

Incredibly, this model worked for a time, with some companies trading at twice (sometimes more) the value of their net crypto assets. However, because mainstream financial institutions now offer products such as ETFs, it has become much simpler for even cautious investors to buy crypto, so bitcoin treasury companies have become much less attractive. As a result, the valuations they can command have started to dwindle. Meanwhile, some bitcoin treasury companies have struggled to issue more shares, leaving their investors with a large amount of very expensive bitcoin.

One such company is Strategy (Nasdaq: MSTR). While Strategy has its own business software and intelligence business, most analysts believe that virtually all its value resides in its 640,000 bitcoin, the largest corporate holding in the world. The problem is that while this pile is worth around $73 billion at current prices, Strategy also has debts of $11 billion. Overall, this means that it trades at a 40% premium to the value of its bitcoin, using the industry’s preferred metric. In other words, those who invest in the company are paying $1.40 for every $1 worth of bitcoin that Strategy holds, a pretty poor deal, especially compared with holding bitcoin directly or through an ETF.

Despite the ongoing appreciation of bitcoin, Strategy’s share price is currently trading below both the 50-day and 200-day moving averages, and is significantly down from its peaks earlier this year. I would therefore suggest shorting Strategy at the current price of $305 at £5 per $1. At the same time, I suggest that you go long on bitcoin at the current price of $114,639 at £1.50 per $100. This means that as long as the price of bitcoin outperforms Strategy’s share price, you should make money. To limit your losses, I would cover your position in Strategy if its share price rises above $610.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

HMRC has confirmed the ISA status of crypto ETNs on the day on which they are permitted for sale to UK retail investors.

The FCA’s longstanding ban on the sale of cryptocurrency (crypto) exchange-traded notes (ETNs) to UK retail investors lifts today (8 October).

What this means in practice is that issuers can submit prospectuses for these products. The earliest that retail investors will realistically be able to buy crypto ETNs will be 13 October. That depends, too, on them using a broker or platform that offers crypto ETNs.

The biggest question mark following the lifting of the FCA ban was around the ISA status of crypto ETNs.

While it is legal to buy, hold and sell crypto in the UK, it can’t currently be held in an ISA. Investors who wanted exposure to crypto price movements within the tax-efficient ISA wrapper had to buy crypto proxy stocks, like Strategy (NASDAQ:MSTR) (formerly MicroStrategy), or funds that are comprised of similar stocks.

These kinds of investments can (ironically) be more volatile than the prices of the cryptocurrencies they are intended to mirror. But the only other means of investing in crypto would expose holders to paying capital gains tax (CGT) on any gains they realised.

"Allowing individuals to gain exposure through tax-efficient methods and proven vehicles will allow for a more secure and mature method of adding Bitcoin and Ethereum to investment portfolios," said Russell Barlow, CEO of 21Shares.

HMRC today (8 October) issued its guidance on the tax treatment of crypto ETNs, which confirms the ISA status of crypto ETNs.

Crypto ETNs can be held in an ISA – but it’s complicated

HMRC’s statement confirms that crypto ETNs can be held in an ISA. That means that investors will be able to shield them from CGT.

"Today's confirmation that crypto asset-backed ETNs will be eligible for inclusion in investors’ ISA and SIPP portfolios represents a massive step forward that we believe will significantly benefit investors and savers in the long-term," said Barlow.

But it’s not completely straightforward. The crucial paragraph is below:

"Initially, cETNs will be automatically eligible for inclusion in stocks and shares ISAs. From 6 April 2026, they will be reclassified as qualifying investments within the Innovative Finance ISA (IFISA)."

So to begin with, investors will be able to hold crypto ETNs in a stocks and shares ISA, but that will change at the start of the next tax year. From that point onwards, you 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.

MoneyWeek has asked HMRC for confirmation on whether crypto ETNs that are purchased in a stocks and shares ISA before 6 April, 2026 can continue to be held in one after that date.

Will crypto ETNs be eligible for stocks and shares ISA in future?

The upshot is that there is a roughly six-month window in which crypto ETNs can be held in a stocks and shares ISA. It seems that you’ll need to open an Innovative Finance ISA if you want to buy them (and, perhaps, continue to hold them) after this date.

However, HMRC’s note did acknowledge that this could change in future:

"The government will keep the inclusion of cETNs 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."

MoneyWeek will bring further updates and reaction as soon as possible.

The first innovative finance ISA (IFISA) product letting investors hold crypto exchange-traded notes (cETNs) has been released.

It comes after the Financial Conduct Authority (FCA) lifted a ban on cryptocurrency (crypto) exchange-traded notes (ETNs) to UK retail investors last year and new HMRC rules allowing cETNS to be held in an IFISA went live this month.

Research from IG last year found that 30% of UK adults would consider investing in crypto via ETNs, well above the 12% who, according to the FCA, currently own crypto.

But since the rules around crypto ETNs in ISAs changed at the start of the new tax year, there has been no qualifying provider offering IFISAs that can hold crypto ETNs – until now.

Fintech firm Stratiphy this month became the first investment platform to let users hold cETNs through an IFISA.

Here is what you need to know.

What are crypto ETNs?

An ETN is similar to an exchange-traded fund (ETF), but it tracks the price of a particular asset rather than a selection of assets.

In the case of crypto or cETNs, that asset is a cryptocurrency.

The FCA lifted a ban on retail investors holding cETNs in October 2025.

Initially, HMRC said cETNs could be held in a stocks and shares ISA but later confirmed that, from the start of the current tax year on 6 April, the only ISA wrapper they can be held in is an IFISA.

IFISAs are set up to hold alternative assets such as peer-to-peer loans, crowd bonds and now crypto ETNs.

Previously, investors who wanted exposure to crypto price movements within the tax-efficient ISA wrapper had to buy crypto proxy stocks, like Strategy (NASDAQ:MSTR) (formerly MicroStrategy), or funds that are comprised of similar stocks.

Who offers cETN IFISAs?

The IFISA market is pretty small, especially since previously big retail P2P lenders such as Zopa and Funding Circle exited.

The latest data available shows that there are around 17,000 IFISAs in the UK, compared to over 3.8 million stocks and shares ISAs.

The market for cETNs IFISAs is even smaller.

Investing platforms and apps such as Interactive Investor and Freetrade offer access to cETNs, but not through an IFISA.

Stratiphy gained IFISA manager status this month and has launched a partnership to allow investment into 21shares cETNs.

This makes it the only current IFISA provider that supports cETNS

Stratiphy’s chief executive Daniel Gold said: “With regulatory changes coming into effect, investors need a simple and compliant pathway to maintain exposure to digital assets. Our IFISA approval and partnership with 21shares allow us to deliver exactly that.”

Duncan Moir, president at 21shares, said: “The UK’s regulatory and tax landscape for digital assets is evolving rapidly, and our priority is ensuring that UK investors aren't penalised by complexity.

“Partnering with Stratiphy enables investors to build exposure to our crypto ETNs through a structure aligned with the UK’s evolving regulatory framework. Together, we are helping market participants navigate these transitions while maintaining seamless access to the most innovative assets in the crypto ecosystem.”

Should you buy a crypto ETN?

A cETN provides a way to gain exposure to cryptocurrency through a regulated provider and a product that is listed on the London Stock Exchange.

That gives you extra transparency and more solid fundamentals than directly putting money into cryptos such as Bitcoin or Ethereum, which are unregulated.

But you are still exposed to the volatile pricing and sentiment towards cryptocurrencies and the FCA has warned there is a risk of losing all your money when investing in the asset class.

However, the only other means of investing in crypto is directly and that would expose holders to paying capital gains tax (CGT) on any gains they realised. So holding a cETN in an IFISA can be more tax efficient as long as you are aware of and prepared for the risks.

Crypto is expected to help boost pension pots, help savers buy a property, and even fund a dream holiday, as savers turn to the digital currency ahead of regulatory changes.

From next week (8 October) the Financial Conduct Authority (FCA) will lift restrictions around cryptocurrency exchange-traded notes (crypto ETNs), meaning investors will be able to purchase them via UK providers with products listed on a regulated exchange.

In January 2021, the FCA banned the sale, marketing and distribution of derivatives and ETNs that reference unregulated transferable cryptoassets to retail clients.

But, since the market has evolved and become better understood, the regulator has now said it wants to give consumers more choice. Crypto is expected to play an important role in portfolios, alongside a mix of top funds, trusts and stocks.

Crypto for life goals?

Exchange-traded products provider, WisdomTree, said interest in crypto ETNs has significantly escalated ahead of the rule changes. Its survey of 3,000 adults found UK savers are considering allocating up to 10% of their portfolio to cryptocurrencies.

When asked why they would like to put money into crypto, the top reason was to generate more disposable income (27%), followed by using it as part of a retirement strategy (26%), to build an emergency savings (22%), a holiday (21%) and then finally a house purchase (21%).

We look at whether you should use crypto to boost your pension in a separate article.

Dovile Silenskyte, director, digital assets research at WisdomTree, said: "For most investors, it is good to have the choice and there is interest.”

She added that while many start their crypto journey with Bitcoin due to the familiarity of the name, investors are over time looking to have a wider range of exposure to crypto now.

Silenskyte said investors surveyed generally had sensible long term goals and exposure should be seen as a good thing, “as long people do not panic buy or panic sell”.

For those planning to retire in twenty or thirty years, “having a small crypto investment may work out relatively well”, said Silenskyte. “For those looking to buy a house, they have to save up for a deposit, so using crypto for a few years can be reasonable.”

How much should you invest in crypto?

WisdomTree claims a small percentage to crypto ETNs, like 1% added to a diversified portfolio, is usually enough for most people and can improve returns, with limited risk.

Two fifths of UK investors said they would be more likely to invest if their bank, investment platform or adviser offered access to the asset class.

While new regulation from 8 October will permit retail investors to access UK-listed crypto exchange-traded products, consumers will not be given any incentives to invest, must understand the risks, and understand they will not be covered by the Financial Services Compensation Scheme.

It is not yet known if they will be allowed to be part of an ISA in the future.

WisdomTree said as investors can’t buy its products directly, they must go through an investment platform/brokerage. When purchasing crypto ETNs, investors will need to pass suitability tests, and each platform will have its own questionnaires to determine whether they meet the criteria needed.

Adria Beso, head of distribution, Europe at WisdomTree, said: “Now that the FCA has permitted retail access to UK-listed crypto ETPs, we expect this to become the preferred vehicle for investors. Institutions will play a crucial role in guiding adoption, whether through advisers, platforms, or direct allocations.”

The firm added that there is a knowledge gap and there needs to be more education around crypto.

Nearly three in four (72%) UK savers and investors say they are not knowledgeable about cryptocurrencies, and nearly a third (31%) indicate that they would not know how to react if prices fell.

“Education is essential to helping investors use crypto sensibly and manage the ups and downs,” Silenskyte adds. “By understanding how crypto works in a portfolio and how to react when prices fall, people can avoid taking on too much risk and make decisions that support their long-term goals. Simple approaches like investing regularly and building balanced portfolios can make a real difference over time.”

According to the FCA, around 12% of UK adults held crypto in late 2024 - this number is expected to significantly increase by the end of 2025.

On 8 October, UK retail investors will once again be able to invest in Bitcoin exchange-traded notes (ETNs), which will be listed on the London Stock Exchange.

The UK financial regulator, the Financial Conduct Authority, banned them in 2020, saying that crypto assets cannot be reliably valued by retail consumers because “these assets have no reliable basis for valuation”.

It was also concerned about “the prevalence of financial crime, extreme volatility, inadequate understanding by retail consumers, and the lack of legitimate investment need.

These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products”.

This accurately described many crypto assets at the time, but I believe it was heavy-handed to include Bitcoin, along with the other major projects such as Ethereum.

Other countries have recognised this, and it is right that Britain should do the same.

In 2020, Bitcoin was emerging as an institutional asset, as it already had an active futures contract in the US.

Bitcoin exchange-traded funds, or ETFs, were launching in Switzerland, Germany, Brazil, Hong Kong, and Canada, and a US version was being discussed. (In Europe the ETFs are often called ETNs or ETPs, exchange-traded products.) The US ETFs were approved in January 2024.

They were a huge success, and the iShares Bitcoin Trust has grown into an $88 billion product, marking the most successful fund launch in BlackRock’s history. Two months later, the UK regulator revised its 2020 statement, saying that crypto ETNs could list in a new segment on the London Stock Exchange dedicated to professional investors only. It reiterated that crypto assets were “high risk and largely unregulated. Those who invest should be prepared to lose all their money”.

Then, as Bitcoin has enjoyed three years of relative calm, in June this year the Financial Conduct Authority (FCA) announced it would lift the ban on crypto ETNs for UK retail investors. “This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry. We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

Catching up with the world on Bitcoin

The FCA recognised that Bitcoin was thriving and that the UK had become an overly cautious outlier. London is a major financial centre, and banning innovative financial products, risky or otherwise, would ensure London’s long-term irrelevance.

A little regulation is a good thing, but too much will certainly kill you. Some of its concerns were legitimate, because many crypto assets are intrinsically worthless. But Bitcoin, along with some other important crypto projects, stand out from the crowd.

For example, crypto assets are volatile, but even in 2020, Bitcoin was much less so than the rest. Its 360-day volatility was in line with Marks & Spencer or Legal & General at the time, and today it is even lower.

Bitcoin has also inspired many innovations, such as the stablecoin, enabling cash transactions in real time over the internet, and non-fungible tokens, which pave the way for the tokenisation of real-world assets. There have also been bright ideas in decentralised finance (DEFI), new trading technologies, and perpetual futures contracts. Many of these ideas are finding their way into mainstream markets. I think the next generation will not differentiate between equities and crypto as they will essentially merge.

Yet still to this day, many ask what Bitcoin's purpose is, and what value does it represent? I think the answer is simple, and the clue lies in its high correlation with the technology sector. While many describe it as electronic gold, its price doesn’t behave like it. It correlates with technology stocks because it is a technology. It has become the de facto reserve asset of the internet.

When you consider how fast AI is growing, and that it operates 24/7, can traditional banking keep up? Bitcoin trades instantly and settles within minutes. It is a very liquid asset trading around $40 billion each day, which is not as much as gold’s $150 billion, but is more than the most liquid stocks in the world, and growing.

The history of crypto regulation in this country mirrors the development of the asset.

As Bitcoin has matured, the regulator has shifted its stance.

At the time of the ban on 6 October 2020, the price of Bitcoin was £8,189. Today it is £84,497. There must have been concerns that Bitcoin was extremely risky, because I cannot recall a case where investors have been prevented from buying a publicly traded asset before.

In UK regulatory circles, we should presume that Bitcoin was seen to be highly toxic. As the FCA is at pains to point out, Bitcoin might still lose you all of your money, but it is also recognised that it could do the opposite.

For those who are intrigued but wary, I have the solution. By holding the 21Shares Bitcoin and Gold ETP (Zurich: BOLD), you get the best of both worlds. It tracks the BOLD index, which I created five years ago. By regularly rebalancing, it adds value by taking profits from the stronger asset, and adding to the weaker, which also keeps a lid on risk. And by owning gold alongside Bitcoin, losing all of your money becomes impossible.

Charlie Morris is the CEO and founder of ByteTree. It offers investment research for private clients through the Multi-Asset Investor (bytetree.com/the-multiasset-investor), in addition to other research services.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

Since World War II, the two landmark events in the evolution of money were Bretton Woods in 1944, when the dollar became the de facto global reserve currency, and then the Nixon Shock of 1971, when the US abandoned the last vestiges of its gold standard. There is a shift currently taking place in the global financial landscape, the ramifications of which might, I suggest, prove equally significant.

You might feel it is unimportant. You might feel it is hugely significant. Either way, before making your mind up, you need to understand what is taking place, so that you can position yourself and your family, if you deem it appropriate. You may even be able to profit handsomely from the transition. Here I explain US dollar policy: what is going on and, more importantly, where it is all heading.

Donald Trump solves Triffin’s Dilemma

The US government, as we know, wants to bring manufacturing back on shore. President Donald Trump has said it repeatedly, his vice-president, J.D. Vance, has said it, and so has his Treasury secretary, Scott Bessent, who keeps reminding us that it is now time to prioritise Main Street over Wall Street.

Part of the reshoring of US manufacturing involves tariffs, as we now know all too well. Part of it involves weakening the US dollar to make US exports more competitive. Again Trump, Vance and Bessent have all said this. However, there is a problem, and that problem has a name: Triffin’s Dilemma, named after Robert Triffin, the Belgian-American economist who first identified the paradox in the 1960s.

You might think it’s an advantage to issue the global reserve currency. You can issue dollars. Everyone else has to work for them. The French called it “America’s exorbitant privilege”. But this was a status the US engineered for itself during the Bretton Woods Agreement that determined the monetary order at the end of World War II. What has happened, however, is that it has made the US fat and lazy, especially since 1971 when the US abandoned the ties of the dollar to gold.

To supply the world with dollars, the US must run trade deficits. That is to say it must buy more than it sells in order that US dollars can make their way out into the world. Persistent trade deficits have, over time, eroded its industrial base. Factories and jobs have gone offshore. Foreign nations have used their profits to invest in US capital markets and its debt. At the same time, financial markets – aka Wall Street – have grown and grown. Part of this process was the financialisation of America.

The Trump administration gets this in a way its predecessors did not. Vance has actually called the dollar’s reserve status a “tax” on American producers. What’s more, as this process has continued, more and more the credibility of the dollar itself is being cast into doubt. This tension forces the US to choose between its own domestic economic needs and the stability of the international monetary system. This is Triffin’s Dilemma. Trump wants to revitalise America’s “rust belt”. But there is more to it than that.

The Covid pandemic pulled back the curtains and revealed the extent to which the US has been operating with its trousers down: an excessive dependence on China and its supply chains for too many strategically essential products, especially those related to health, technology and the military. Then, during the Ukraine conflict, Nato found itself unable to match Russian munitions production. The US, in short, is struggling to produce critical goods. It’s why Trump keeps harping on about rare-earth metals. It is vulnerable.

Moving away from dollar towards gold and bitcoin

The answer is to engineer a “managed decline” of the dollar and reduce its role as a global reserve asset. This was already happening organically. China, for example, has been reducing its holdings of US Treasuries for 10 years now – quite gradually – although its US dollar holdings remain above $3 trillion. Meanwhile, China – and many other countries along the Silk Road besides – have been increasing their gold holdings, and quite dramatically. (In my view China has at least four times as much gold as it says it does. You can read more on this in my book, The Secret History of Gold: Myth, Money, Politics & Power.) The process is known as dedollarisation. Just a few months ago, gold overtook the euro to become the second most-held asset by central banks; the dollar itself fell beneath 50% for the first time this century. In fact, gold has just overtaken US Treasuries as a percentage of central-bank holdings worldwide.

We are not seeing a move towards any other national currency as global reserve. There is not one that could take up the role, despite what the bureaucrats in Brussels might try to tell you about the euro. The move is towards the neutral but universal asset that is gold. That suits all the main players. Gold is neutral and both the US (assuming it has all the 261 million ounces of gold that it says it does) and China have lots of it. (US gold has not been audited in over 60 years, hence the doubts.) Indeed, a gold revaluation would be a “win-win” for both China and the US. A higher gold price would strengthen US fiscal flexibility while boosting Chinese consumers’ wealth, encouraging domestic consumption and reducing trade imbalances. (China has been encouraging its citizens to buy gold since 2007.)

There is the potential to leverage the US’s 261 million ounces (8,133 tonnes) of gold reserves, currently marked to market at just $42/oz. There are two ways this might be done. Economist Judy Shelton has proposed issuing Treasuries that are in part backed by gold to offset the inflation/debasement risk to make them more attractive to buyers. The other possibility (which has gone from, as Bessent put it, “we are not doing this” to “we are not doing this yet”) is to revalue the gold from $42 to the current price of $3,400/oz, which would create more than $850 billion of reserves without having to incur any extra debt. That would help with the US’s current fiscal challenges: true interest expenses (including entitlements and veterans’ affairs) currently exceed 100% of Treasury receipts. In short, the US administration is leaning into a weaker dollar and the neutral reserve asset that is gold to rebalance trade and rebuild domestic industry, even at the cost of short-term economic pain.

A showdown between gold and bitcoin

Bitcoin, as the world’s best neutral digital currency, is going to have a role to play in all of this as well. The US is quite happy with that, too, as evidenced by its pro-Bitcoin rhetoric. At the national, corporate and individual levels the US has a lot of Bitcoin. The US itself has 198,000 coins, the most of any nation; Strategy (NYSE: MSTR) has 630,000 and many other companies besides also hold the asset; and 15%-20% of US citizens are thought to own some Bitcoin. Of the eventual 21 million supply, probably 15% has been lost and another 1.3 million are locked up by Satoshi Nakamoto and will likely never appear (he is almost certainly dead) – a hefty chunk one way or the other.

Which brings us to the recent Genius Act. This effectively nixed central bank digital currencies (CBDCs): the Federal Reserve Bank is now not allowed to issue them just as, irony of ironies, the EU’s Christine Lagarde was planning to phase them in. However, the act supported stablecoins (that is, coins backed by dollars) as a private-sector alternative. The more bitcoin grows, the more the stablecoin market will grow. Today, roughly half the entire US dollar stablecoin market, estimated at $250 billion, is invested in US Treasuries (maybe 2% of the overall Treasuries market). Tether is the world’s seventh-largest buyer. As the stablecoin market grows, so will its demand for Treasuries.

The market is small, but growing rapidly. Projections of its growth range from $500 billion in 2035 (JPMorgan’s guess) to $2 trillion (Standard Chartered) and $4 trillion (Bernstein). “If the stablecoin market meets these growth projections,” says the Kansas City Fed, “it could lead to a substantial redistribution of funds within the financial system.” In other words the stablecoin market is going to help the US fund its debt, just as other nations move away from Treasuries to gold and bitcoin. Gold might suit the US as a neutral currency, but bitcoin suits it better, especially if there are complications surrounding the Fort Knox gold, which it seems there are. Why no audit yet?

It’s likely a few years from now, there is going to be some sort of showdown between gold and bitcoin in the battle for primary reserve asset status. It’s unlikely to be both. Governments will favour gold, as they have lots of it. Tradition is on their side. Eternal gold has a track record that is unrivalled. But it is an analogue asset in a digital world. Bitcoin is much more practical. Which will win out? Practical digital or impractical analogue? This is a contest that is still a way off. For now all roads lead to gold and bitcoin as the world dedollarises. Own both is what I say.

Britain left behind on both gold and bitcoin

Needless to say the UK is absolutely clueless in all of this. The government sold two-thirds of its gold in 1999 and the Financial Conduct Authority regulator has made it near impossible for UK citizens to buy bitcoin. Word is that the chancellor is now planning to sell the country’s bitcoin holdings – though as these are confiscated this is legally problematic. The UK has recently overtaken China to become the largest holder of US Treasuries in the world after Japan, just as everybody else is dumping them. It is making no attempt to buy any gold either. We really have clueless clowns running the show.

Meanwhile, with the threat of AI and automation to America’s jobs – especially in jobs that involve driving, where millions work – there is the risk of mass unemployment coming quite quickly, and with it plentiful defaults on mortgages and loans. This could force the US to print money, driving inflation and providing yet another reason to own gold and bitcoin, which cannot be debased.

In short, the dollar will weaken significantly over the next three years. The pound is a basket case. National currencies are not stores of wealth. Gold and bitcoin are. Own both as the Trump administration addresses Triffin’s Dilemma through a managed dollar decline. They will use gold and potentially bitcoin to restore US industrial and military strength. This is the shift that is taking place.

Dominic Frisby writes the investment newsletter The Flying Frisby.

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Do Kwon, a crypto entrepreneur from South Korea, once boasted of building a stablecoin “ecosystem” – free from the tentacles of Wall Street and government regulators. Appearing in a Manhattan courtroom, wrists and ankles chained, in a bright yellow prison jumpsuit, was not part of the plan.

Nonetheless, Kwon might consider he got off lightly. Having pleaded guilty to two criminal counts of fraud related to the $40 billion collapse of digital coins Luna and TerraUSD in 2022, he may get just 12 years in jail as part of his plea deal, notes the BBC. That sound you hear in the background is Sam Bankman-Fried – the former FTX supremo, locked up for 25 years for a much smaller fraud, rattling the bars of his cage.

It’s hard to overstate the impact of the sudden implosion of Kwon’s Terraform Labs empire, which was described by one analyst at the time as “the largest destruction of wealth… in a single project in crypto’s history”. The size of the crash helped trigger the descent of the whole sector into the so-called “crypto winter” of 2022, which the World Economic Forum later estimated wiped out some $2 trillion of assets.

The shock was all the more profound because TerraUSD, which was pegged to the greenback, was considered one of the most established stablecoins, says The Verge – supposedly much less “volatile” than many of its peers. It attracted some 280,000 investors, including leading US crypto venture-capital firms and an army of small investors in Korea. Prosecutors later claimed that Kwon, 33, constructed a “financial world” that was “built on lies and manipulative and deceptive techniques”, says the FT. The human cost of the heavy losses was very real. “Media reports of multiple suicides associated with the collapse” made him “a villain in his home country”.

Do Kwon, king of the "Lunatics"

Kwon’s court appearance last week caps “a spectacular fall from grace” for the once brash Stanford graduate who, at his boastful peak, derided critics as “cockroaches” and seemed to relish stirring up trouble, says The New York Times. He claimed his “invention” of an “algorithmic stablecoin” – pegged to the dollar, but backed by the fluctuations of a sister currency, Luna – would transform finance. Fans called him king of the “Lunatics”. Kwon himself dreamed big aloud about the Terra universe he would create. Born into a well-heeled Seoul family, and educated at the elite Daewon Foreign Language High School, he studied computer engineering at Stanford.

Jobs at Microsoft and Apple followed, but Kwon was increasingly hooked by the crypto craze and in 2018 returned to Korea to co-found Terraform Labs. It took the effervescent, social media-savvy entrepreneur just a couple of years to emerge as one of crypto’s “most-watched whales”, says Bloomberg.

When his Terra empire collapsed, life changed dramatically for Kwon. After the South Korean authorities issued a warrant for his arrest in 2023, he fled, “living the life of an exiled oligarch on the run, carrying multiple devices and passports”, says Disruption Banking. “An older-looking, world-wary Do Kwon” eventually surfaced in Montenegro, from where he was eventually extradited to the US – after being caught at the airport trying to escape to the United Arab Emirates using a forged Costa Rican passport.

As part of his plea deal, Kwon must forfeit more than $19 million in proceeds from his crypto dealings. In time, he may also have to face the music back home: he still faces charges in South Korea. “I’ve never thought about what could happen to me if this fails,” he told Coinage in 2022. Plenty of time for that now.

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The world has always been an unpredictable place for investors, and it has become more so over the past five years. Digitisation is partly to blame. News can travel from one side of the planet to another in seconds. The news can then be manipulated and redistributed in a heartbeat, sometimes with devastating consequences. Digital technology has also accelerated the pace of change across the economy. Start-ups powered by AI are reaching revenue milestones once thought impossible.

Y Combinator (the start-up accelerator known for backing Airbnb and Dropbox) recently said its latest batch of tech start-ups was growing at 10% per week, an unprecedented rate in a start-up venture. Most of these companies would have had to hire large teams of expensive human coders a few years ago. But today, 95% of the code has been written by AI.

These digital changes are coming at a time when populist political parties have upended the global political order. Donald Trump’s global trade war has disrupted trading networks established over decades and threatened the dollar’s status as a safe haven. Furthermore, the world’s largest countries are drowning in debt, severely hampering their ability to respond to future crises.

Multi-asset trusts offer added protection

Against this backdrop, it is worth considering the place of multi-asset trusts within a portfolio. Maggie Fanari, CEO at J. Rothschild Capital Management, the manager of RIT Capital Partners (LSE: RIT), notes that multi-asset trusts such as RIT “offer investors access to differentiated global strategies, hard-to-reach assets, and long-term structural themes, making them highly complementary to most portfolios… A multi-asset approach gives us the ability to respond decisively to shifting macroeconomic conditions across a market cycle.”

Multi-asset trusts also provide investors with an added layer of protection through diversification. “Diversification is famously the only ‘free lunch’ in finance,” says Alastair Laing, CEO at CG Asset Management and co-manager of Capital Gearing Trust (LSE: CGT).

The closed-ended structure of an investment trust is perfectly suited to diversification and multi-asset holdings, some of which are likely to be illiquid. “Our permanent capital base gives us a structural advantage, enabling us to maintain conviction in high-quality investments… ride out short-term volatility, and allocate meaningfully to less liquid opportunities,” says Fanari.

Of course, investors could build their own multi-asset portfolio – encompassing assets such as bonds, equities, gold and even exposure to illiquid assets, such as private equity and renewable energy – via investment trusts. However, this comes with another set of risks. “This requires significant effort and could be tax-inefficient if capital gains tax is crystallised each time rebalancing occurs,” explains Laing.

Investors pay a fee for a trust’s portfolio management, but they’re paying for the managers’ skill. There are also tax benefits, as the assets remain within the trust. A trust such as RIT also provides exposure to somewhat exclusive private-market themes. “We also benefit from access to specialist managers,” says Fanari. “These specialist partners value our long-term, patient capital.” All of the big multi-asset trusts, Capital Gearing, Personal Assets (LSE: PNL), RIT and Caledonia Investments (LSE: CLDN) offer something slightly different, with the latter more focused on private equity. Capital Gearing and Personal Assets have also favoured a more defensive approach, focusing on bonds (mostly inflation-linked), gold and equities.

Personal Assets’s co-managers, Sebastian Lyon and Charlotte Yonge, say the investment team’s views in recent years have been “shaped by an expectation of regime change”. Inflation, government debt, shifting political sands, economic uncertainty and technological change have created a “world of greater uncertainty, higher inflation and a bond bear market, which began in the summer of 2020. Thus far, the 2020s are looking very different from the 2010s”.

The managers have shifted the portfolio away from risk assets to “ complementary asset classes that may offset falls in equity markets”. They’ve also reduced exposure to the US dollar “as investors increasingly question the dollar’s position as the world’s reserve currency”. Instead, Personal Assets has been adding to its yen holdings. Index-linked bonds play a key part of the wealth-protection strategy for Capital Gearing and Personal Assets. “We consider that the role inflation-linked bonds play in a fiat monetary system is the same as the role gold played under the gold standard – that is to say, the closest asset class to risk-free,” says Laing.

Charlie Morris, the founder and chairman of ByteTree, argues that investors should go one step further. “Hold bitcoin for return as it catches up with gold as a reserve asset, and gold as a hedge. I believe the risk-weighted combination of the two assets is the optimal approach for asset allocators. In my opinion, gold is the reserve asset for the real world, and bitcoin is the reserve asset for the internet.”

Having a small amount of bitcoin in a portfolio has been a sensible decision for the past few years. It illustrates why it’s reasonable to consider a range of assets across a portfolio. Multi-asset trusts can take some of the effort out of this decision-making process. Not all investors will be comfortable with this approach, but it’s worth considering. The goal of a multi-asset portfolio is to reduce risk and volatility via diversification and enhance long-term returns.

“The pain of losses [outweighs] the joy of profits, which can lead to poor investment decisions,” says Laing. “By investing to avoid significant drawdowns, investors can protect their portfolio against their poor, emotion-driven decisions.”

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Cryptocurrencies, in particular Bitcoin, have delivered outsized returns for investors classes over the last decade-plus. Analysis of Morningstar data from VanEck showed that, between the start of 2014 and 30 June 2025, Bitcoin was the best-performing asset class in 9 of these 12 years and posted an average annualised return of 630% – with the second best-performing asset class, US equities, returning 15% on average over the same period.

Alongside the more conventional top stocks and funds, it is therefore little surprise that cryptocurrencies are becoming an increasingly popular choice among investors.

Data from Aviva shows that 21% of Brits – more than one in five – have bought cryptocurrencies and that more than a quarter consider crypto as part of their retirement planning.

“There are lots of different investment opportunities out there, and it’s easy to see why cryptocurrency has become so popular in recent years,” said Michele Golunska, managing director of wealth & advice at Aviva. “But we mustn’t forget the value of the good old pension.”

Among 25-34 year olds, 18% say they have reduced their pension contributions in order to buy cryptocurrency. Those doing so risk missing out on what Golunska calls “some powerful benefits” associated with pensions, including employer contributions (which often scale depending on how much employees contribute) and tax relief.

Why are people investing in crypto for their pension?

The potential for outsized returns were the greatest motivator for people to invest into crypto as part of their retirement planning. Of those Aviva surveyed who were considering diverting funds away from their pension and into crypto, 43% said they were motivated to do so because of the higher potential returns. Innovation and technology was a key driver for 36% of, while 32% said they wanted to invest in crypto in order to diversify their portfolio.

Persistent shifts in the pension goal posts from the government could be another reason why people are more inclined to invest in crypto than put the money into their pension, says James Yardley, head of investments at Chelsea Financial Services.

“The government keeps changing the rules [on pensions],” says Yardley. “I think that’s obviously partly contributing to the fact that people are turning away from their pension and looking to invest in other ways.”

Pensions will be subject to inheritance tax from April 2027 under changes that were announced in last year’s Autumn Budget. There are also rumours that Labour could reinstate the pension lifetime allowance, which was scrapped by the former Conservative government.

Meanwhile, crypto has obvious appeal for anyone who is distrustful of governments. The investment case for crypto in general rests on it being a hedge against the inflation that typifies fiat currencies over time, given its inherently limited supply. Many of the use cases for cryptocurrencies like Ethereum also revolve around secure payments that can’t be traced by banks and governments.

Boosting your pension with crypto: the pros and cons

Given the huge gains that crypto investors have realised over recent years it is understandable that many are tempted to use crypto to boost their pension, but it is important that anyone considering it understands the pros and cons.

“It’s hard to hold crypto inside the Sipp or ISA structure,” says Yardley. Crypto held outside of either of these could be subject to capital gains tax. You will also miss out on the tax relief that investing the equivalent amount into a pension would confer.

That could potentially change in October, when retail investors will be able to buy crypto ETNs that act as direct proxies for cryptocurrencies such as Bitcoin or Ethereum.

In the meantime, though, the only way to gain crypto exposure within one of these tax-efficient wrappers is to buy a blockchain ETF, which offer some imprecise exposure to crypto prices, or to buy a cryptocurrency proxy stock such as Strategy Inc (formerly MicroStrategy) (NASDAQ:MSTR).

Another consideration that Yardley highlights is the correlation between crypto prices and tech stocks. In theory, crypto ought to offer diversification to a portfolio of shares, but recently crypto prices have moved in tandem with big tech stocks, which in turn tend to lead broader equities markets.

Cryptocurrency and retirement planning

Ultimately, like any investment, it is up to individuals to decide the wisdom of incorporating crypto into their retirement plans.

“It’s important to weigh up the risks and rewards carefully and make sure your retirement savings are working as hard as they can for you,” says Golunska.

Yardley suggests that, given its volatility, it wouldn’t be advisable for anyone to put 100% of their long term savings into crypto. But its potential for rapid returns and its resistance to inflation mean that “there is a case for putting 5-10% in”.

If crypto is playing a role in your retirement planning, be aware that it can be difficult to pass it on. Inheriting crypto assets is complex because they are not automatically accessible or traceable – discretion and privacy are hard-wired into their design.

Aviva encourages consumers to take a balanced approach to retirement planning and urges people to prioritise long-term financial security over short-term speculation.

Cryptocurrencies – often abbreviated to ‘crypto’ – are a novel form of currency that is acquired and exchanged digitally.

Cryptocurrencies are “designed to operate outside the direct control of central banks or single entities”, says Rahul Bhushan, managing director at ARK Investment Management. “It’s powered by cryptography and recorded on public, distributed ledgers called blockchains.”

There are currently 19.45 million cryptocurrencies in existence, according to CoinMarketCap, though other sources put the total number in the tens of thousands (the discrepancy likely depends to a large extent on how loose a definition of cryptocurrency is being used). Some of the most popular are Ethereum, Solana and Binance Coin (BNB) but the best known by far is Bitcoin.

Bitcoin was invented in 2008, but the price of a single Bitcoin didn’t pass $1 until 2011. At time of writing (27 August 2025), one Bitcoin is now worth $111,022.33, an increase of 11,102,133% over the last 14 years, or an annualised return of 129.29%.

That makes Bitcoin one of the best-performing asset classes during that period (possibly the best) and has, understandably, sparked huge interest in cryptocurrencies among investors.

But critics view crypto as an inherently valueless asset, and point to concerns that cryptocurrencies are often used by criminal organisations.

You might be thinking about investing in crypto, but before doing so it is important to understand how cryptocurrencies work and the risks involved.

How does crypto work?

Cryptocurrencies run on blockchain technology. A blockchain is effectively a decentralised database. It stores information across a network of computers or servers. It makes data immutable – meaning that it cannot be altered.

“While some networks are more decentralised than others, most aim to run on open protocols where anyone with an internet connection can participate,” says Bhushan.

While often conflated, crypto and blockchain are two different things. Blockchain is the underlying technology, and it has other applications beyond cryptocurrencies. For example, it is often used in supply chain management: the ability to create immutable records of every stage of a supply chain can improve its efficiency and transparency. Crypto, on the other hand, refers specifically to the digital currencies that are traded using blockchain technology.

Each cryptocurrency has its own unique features, but in general they have to be ‘mined’. Crypto miners are effectively vast data centres that deploy massive amounts of computing power in order to solve complex cryptography problems – from which crypto derives its name. This process is often referred to as ‘proof of work’ and is the traditional way in which units of cryptocurrency come into existence.

Why is crypto so popular?

Crypto has always been popular among people who want their money to be independent of any form of influence either from nation states or the traditional banking system. This has led to a number of stereotypes emerging, for example the myth that it is only used by criminals.

But there are some advantages to crypto beyond its inherent privacy and libertarian appeal.

Firstly, it can operate as a means of exchange that doesn’t rely on proprietary infrastructure (such as Mastercard’s or Visa’s technology). This can make it a cheaper means of exchanging money internationally, and blockchain technology is viewed by many as a more secure method of exchange.

Secondly, it is perceived to be a hedge against inflation. Fiat currencies tend to depreciate in value over time because central banks can (and do) push more currency into the supply. Cryptocurrencies, though, tend to be resistant to inflation because their supply is more limited.

There will, for example, only ever be 21 million Bitcoins mined thanks to how it was designed. The rate at which new Bitcoins come into existence also halves approximately every four years, in an event known as the Bitcoin halving, which further limits the supply of Bitcoin. As of June 2025 there were around 1.5 million more Bitcoins to mine – but because of the halving, it is expected to take until 2140 to mine them all.

Bitcoin is “often compared to digital gold because of its limited supply and potential as a store of value”, says Bhushan.

Crypto’s independence from central banks and the global economic system more broadly also makes it popular in some developing economies who are frequently stung by volatile shifts in currency exchange rates, especially against the dollar.

Should you buy crypto?

Cryptocurrencies are hugely volatile assets. Bitcoin is something of an outlier in having posted consistent gains for more than a decade, and even then it has seen multiple periods of rapid declines along the way.

Ethereum (the second-largest cryptocurrency by market capitalisation) has gained over 1,000% in the last five years, and recently reached an all-time high of $4,955.90.

But during this time it has fluctuated wildly. Between November 2021 and June 2022 Ethereum fell from its peak (at around $4,600) to just over $1,000. It recovered to above $4,000 by December 2024 before falling to below $1,600 by March 2025.

Bitcoin and Ethereum are two of the more stable cryptocurrencies. Smaller, more niche ones can be even more volatile, and unlike Bitcoin and Ethereum, there is little mainstream institutional buy-in (in the form of crypto ETPs) to support demand.

Additionally, there are some security risks. Crypto buyers are often targets for scams, and exchanges like Coinbase make promising targets for cyber attackers.

So while investing in crypto has undoubtedly paid off for many people, particularly early adopters of Bitcoin, new entrants should proceed with caution and consider how much of their investment they would be prepared to lose in the event of a sudden crash in the price.

This article is intended for information purposes only and should not be considered financial advice.

The intrinsically private nature of cryptocurrency is putting millions of pounds of assets at risk when people die because their loved ones simply lose access to them, lawyers have warned.

Crypto assets, like Bitcoin, is a highly risky, speculative investment where you could lose all of your money – or potentially make millions. Yet despite the volatility, ownership of the alternative currency is on the rise.

According to a Financial Conduct Authority (FCA) survey in late 2024, about 12% of UK adults now own cryptocurrency, up from around 4% in 2021. That’s about seven million people. And with new FCA rules allowing investors to buy cryptocurrency exchange-traded notes (crypto ETNs) from October, interest is only set to increase.

But many UK crypto investors are unaware their investments could be lost when they pass away, as crypto assets are not automatically accessible or even traceable through existing methods when someone dies.

Additionally, most crypto exchanges do not allow investors to name direct beneficiaries or solicitors to manage assets after their death. This makes probate very difficult.

Families of those crypto investors could, as a result, lose access to millions of pounds of crypto assets they would otherwise inherit from a loved one, TWM Solicitors, a private wealth and family law firm, has warned.

New rules announced by the government in May mean crypto firms with UK customers will soon have to meet clear standards on transparency, consumer protection and operational resilience – just like firms in traditional finance. But it’s not clear what this means for passing on assets.

Stuart Downey, partner at TWM Solicitors, said: “To look for most normal financial assets you can conduct a ‘financial asset search’, which is relatively inexpensive and contacts hundreds of organisations.

“However, as far as I am aware, there’s no such thing for cryptocurrency. Even if there were, it is unlikely to work for private wallets.”

Can you inherit cryptocurrency?

Cryptocurrency is similar to property in that it can be owned, gifted and inherited. But the often private nature of holding crypto assets means the executor of an estate may not even know they exist.

Typically after death, if there is uncertainty about an individual’s assets, financial asset searches can be used.

These contact institutions including banks, building societies, investment managers, share registrars, pension providers and insurers to look for assets in cases like probate.

But crypto assets are held on crypto exchanges and in escrow wallets, the providers of which don’t facilitate probate like banks or portfolio managers, hindering the transfer of crypto assets after the death of their owner to their dependents, TWM said.

“Families are at risk of losing access to crypto assets after the original investor’s death – even if they are named beneficiaries in a will,” said Downey.

He called for “urgent” reform to ensure crypto exchanges are integrated into the standard probate regime.

“This will ensure estate administration runs smoothly – as it does with pensions, savings and investments – so donors’ wishes can be fulfilled and so their family and other dependents are not deprived of these assets,” he said.

How can I make sure my crypto assets aren’t lost after I die?

Digital assets – like cryptocurrencies or NFTs – are stored in digital wallets accessible only with private keys.

They are usually highly encrypted to protect the investor’s assets, making it extremely difficult for anyone other than the individual investor, or someone in possession of the key, to access these assets.

“If the original investor passes away, their crypto wallets may be effectively locked forever,” Downey said.

Crypto investors should seek professional advice when drafting their wills to ensure their beneficiaries and executors know the value of the digital assets – and, crucially, have instructions on how to access them securely and who they should go to on death.

This could be with an encrypted USB drive with seed phrases, a hardware wallet and Pin, or a “dead man’s switch” service that sends the information to the executors or beneficiary.

Crypto assets held overseas by UK investors may be especially hard to recover, as there simply aren’t good mechanisms in place to access crypto holdings in overseas jurisdictions once the original investor has passed away.

Downey said: “The reality is that crypto exchanges lag behind legacy financial institutions in providing access for personal representatives.

“Assuming digital assets will be automatically inherited after death may result in them being lost forever.”

eToro, a platform that lets investors trade and manage more than 70 cryptocurrencies as well as stocks and ETFs, said it has a duty of confidence to its clients, even after their death.

“This means we cannot disclose information about our investors to anyone other than parties who are legally entitled to it,” eToro’s website stated.

Once it receives confirmation an eToro account holder has died, it closes the investment account, including any open positions and any services connected to it, such as the eToro Money account and eToro Money crypto wallet.

“We then transfer the funds either to an estate bank account in the name of the eToro account holder or to the executor. We do not send funds to the beneficiaries of the estate,” the website said.

Executors of a deceased eToro investor need to open a ticket in its customer service centre with the details of the account to begin the process of transferring funds.

The executor will then need to provide certain documents, including:

• The death certificate of the eToro account holder
• A notarised letter from an attorney confirming who is the executor of the eToro account holder’s estate
• A notarised copy of the eToro account holder’s will confirming who is the executor of the estate
• In cases where the executor is a direct relative: A document proving the relation to the eToro account holder (e.g. marriage certificate, birth certificate)
• Proof of identity of the executor or contacting relation
• Details of an estate bank account (set up once the bank has been notified of the death, in the eToro account holder’s name)

Other crypto platforms will have their own rules about what happens when a customer dies.

UK-based retail investors will be able to buy cryptocurrency exchange-traded notes (crypto ETNs) – with safeguards in place to ensure that products aren’t missold - following new rules from the Financial Conduct Authority (FCA) which come into play later this year.

Cryptocurrencies are popular among UK retail investors. Some of the top stocks on Interactive Investor’s platform over recent months have included Tesla and MicroStrategy, both of which hold Bitcoin on their balance sheet.

Around 12% of British adults now own some form of cryptocurrency, up from around 4% in 2021.

But since January 2021, the FCA has banned the sale of crypto products – including crypto ETNs – to retail (AKA ‘DIY’ or individual) investors.

That ban will be lifted on 8 October.

“Since we restricted retail access to crypto ETNs, the market has evolved, and products have become more mainstream and better understood,” said David Geale, executive director of payments and digital finance at the FCA. “In light of this, we’re providing consumers with more choice, while ensuring there are protections in place.”

The FCA announced a crypto regulation roadmap in November last year, and the lifting of the retail ban on crypto ETNs is one of its latest decisions. It is also potentially one of the ones with the greatest implications for everyday investors.

The decision “marks a pivotal moment in the broader integration of digital assets into the financial system”, said Dovile Silenskyte, director of digital assets research at WisdomTree.

Similar products have been hugely popular in other countries, but will UK investors buy the hype?

What is a crypto ETN?

ETN stands for exchange-traded note. This is a type of financial instrument that trades on a stock exchange and gives investors exposure to cryptocurrency prices and their movements.

An ETN is a form of exchange-traded product (ETP). The best-known form of ETP is an exchange-traded fund (ETF), which is a fund that trades in real-time on a stock exchange.

Some investors might be familiar with exchange-traded commodities (ETCs). These act like ETFs but they track the price of an individual commodity; they can be used, for example, to invest in gold.

ETNs are similar to ETFs and ETCs but they typically track a more niche product or index, without requiring investors to directly hold the underlying securities.

Crypto ETNs are often described as physically-backed, as their market price is based on underlying crypto assets which the issuer holds.

While some investors won’t want to hold cryptocurrency through an ETN – there are risks associated with the structure, such as counterparty risk – they offer some advantages over buying cryptocurrency directly.

Unlike cryptocurrencies themselves, most ETNs can be bought and held in a stocks and shares ISA, meaning that they are more tax-efficient.

Additionally, some investors may be concerned about the security risks involved in setting up an account with a specialist cryptocurrency exchange. Coinbase, for example, was subject to a major security attack earlier this year.

“By accessing crypto through ETPs, retail investors can now engage with crypto in a safer, more transparent environment, in doing so reducing the risks of unregulated platforms,” said Silenskyte.

Should you buy a crypto ETN?

While investors will soon be able to buy crypto ETNs, it is another question entirely whether or not they should.

Cryptocurrencies are inherently volatile, making them a very high-risk investment. They are generally unsuitable for beginner investors, and any decision to invest in them should be made in consultation with a financial adviser.

ETNs in particular could expose investors to extra risks. While the Consumer Duty will apply to firms selling crypto ETNs to prevent their mis-sale, crypto ETNs won’t be subject to coverage from the Financial Services Compensation Scheme.

It is important, then, that investors understand the risks involved thoroughly before deciding to buy a crypto ETN.

But advocates think cryptocurrencies are an increasingly important part of the investing landscape and that the move will help investors understand the role they can play.

“These products make it easier for investors to evaluate and manage crypto within the context of their broader portfolios, in turn supporting more informed decision-making in pursuit of long-term investment goals,” said Silenskyte.

“While these products remain subject to the FCA’s mass market restriction, today’s move lays important groundwork for broader retail engagement under a regulatory framework."

What’s the point of stablecoins?

Stablecoins – principally tether and circle – are digital tokens run on public blockchains (digital ledgers) whose value is determined not by supply and demand, as with bitcoin, but are backed by a specified asset (such as the US dollar), or basket of assets. Whereas bitcoins are arguably useful as a store of value – albeit a wildly speculative one – stablecoins are genuinely useful when it comes to transactions. The main use of stablecoins is as a safer currency reserve held between trades on cryptocurrency exchanges.

But over the past year – boosted by the enthusiastic backing of the Trump administration – they are increasingly used as a vehicle for sending money anywhere in the world quickly, with low fees, or for trading without wild price swings. Users regard stablecoins as a readily accessible proxy for US dollars that are cheaper and faster than the network of correspondent banks that handle most of the world’s cross-border transactions. With stablecoins, the money is transferred across the internet, outside the banking system, which “makes them highly attractive in countries afflicted by high inflation, weak or volatile currencies, unstable banks or capital controls”, says Philip Stafford in the Financial Times. In Turkey, for example, stablecoin transactions accounted for about 4.3% of GDP in the year to March 2024. Ethiopia is another fast-growing market.

Are all stablecoins pegged to the dollar?

Almost all stablecoins are linked to the world’s most powerful “fiat” currency. But some higher-risk stablecoins are linked to other cryptocurrencies, and others (even riskier) are based on algorithmic trading.

This week, a European joint venture that includes Deutsche Bank’s asset-management arm DWS, which manages about a trillion dollars globally, was licensed by the German regulator to issue the first euro-denominated stablecoin.

Here in the UK, BCP Technologies last month launched tokenised GBP (tGBP), the first sterling-denominated stablecoin from a UK-registered issuer to go live. According to the firm, each tGBP token is backed one to one by “reserves held in a segregated account at a UK-regulated financial institution and is fully redeemable for sterling at any time”.

How popular are stablecoins?

There’s currently around $250 billion of stablecoin in circulation, a figure projected (by investment bank Standard Chartered) to grow to $2 trillion by the end of 2028. The number of wallets that regularly send and receive payments hit a record average of 46 million in May, up from 27 million a year before. And according to data firm Chainalysis, total trading, payments and transfers in stablecoins hit $27.6 trillion last year, or two-fifths of all value settled on public blockchains, up from a fifth in 2020. But as the tokens move into the mainstream, critical voices are getting louder. Sceptics argue that they are essentially unregulated bank deposits, with all the risks of failure and systemic contagion that implies. There’s nothing you can do with a stablecoin that “can’t be done more cheaply and more easily with debit cards, Venmo, Zelle, wire transfers and so on, argues economist Paul Krugman on Substack. “Why not just use dollars instead of tokens that are supposedly backed by dollars?”

What’s the answer?

Anonymity – a highly valuable feature for those who want to engage in money laundering, extortion, the purchase of illegal drugs, and so on. For Krugman, stablecoin issuers are “teched-up” versions of 19th-century unregulated banks, which repeatedly experienced panics, bank runs and failure. Indeed, as shadow banks accumulate large reserves of US government debt, they are even more dangerous: a run on stablecoins could turn into a run on US government debt – driving up interest rates in the real economy and causing global panic. In a nutshell, the “growth and legitimation of stablecoins poses new risks to overall financial stability” – all in the name of making life easier for criminals.

Who agrees?

The Bank of International Settlements (BIS) issued a scathing report on stablecoins last month. Society must choose whether to modernise payments sensibly or go down the free-for-all stablecoin route. If it chooses the latter, we will “relearn historical lessons about the limitations of unsound money” that fails “the triple test of singleness, elasticity and integrity”. The BIS advocates the development of a central-bank-based system that “preserves the singleness of money with more efficient domestic and cross-border transactions” and with anti-crime checks, says Chris Giles in the Financial Times. We should wish the central banks well. “It is a race against time.”

Who disagrees?

The US federal government. In January, Donald Trump declared that the US would be “the crypto capital of the planet” and backed “lawful and legitimate dollar-backed stablecoins” as a means of bolstering the dollar’s dominance and demand for Treasuries. Last month, the Senate passed the Genius Act, setting out a notably light-touch regulatory framework for stablecoins. The dangers can be over-egged, says Felix Martin on Breakingviews. Anonymity of transactions is a feature of physical banknotes. Prudential risks are already a concern for money-market funds and traditional banks. And the potential dilution of monetary policy is a “familiar gripe” of central bankers in emerging markets. Regulators are really spooked not by new risks, but by the “frightening scale, scope, and speed which digitisation allows”. Increased oversight would not be all bad for stablecoins, says The Economist, as it would spur interest from mainstream finance companies. Payments firm Stripe recently bought Bridge, a stablecoin-infrastructure start-up. Visa has built a platform to help lenders issue coins. Japan’s Sony Bank is testing its own token for payments, and analysts expect other big banks and Silicon Valley tech companies will also join the fray.

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The only countries that own more bitcoin than the UK are the US (with 207,000 bitcoin) and China (194,000). Britain has 61,000, worth more than $6 billion. But don’t tell Rachel Reeves. She might be tempted to sell it. History would then look back on her as an even greater fool than Gordon Brown for selling the nation’s gold. Ours are mostly seized bitcoin, a lucky legacy from the early days when the UK was at the heart of bitcoin’s evolution. The City’s regulator, the Financial Conduct Authority (FCA), in its wisdom, put a stop to all that, and so we fell behind.

This legacy has given the UK an extraordinary advantage in the global arms race that is bitcoin adoption. We would be mad to spurn it. Meanwhile, as bitcoin moves into the mainstream, something remarkable is taking place in the corporate world of bitcoin adoption, and it is accelerating rapidly. The trend is being spearheaded by Michael Saylor, chairman and founder of Strategy.

I recommended MicroStrategy, as it used to be called, when writing for MoneyWeek in 2023, largely because it was a means to secure exposure to bitcoin via your broker. You wouldn’t have to jump through all the hoops of buying bitcoin through exchanges, which the FCA has made so difficult for British investors. (The FCA began its attack on bitcoin ownership when bitcoin was at $6,000, so that’s around $100,000 of gains, a seventeen-fold increase, that UK investors have been “protected” from. Its rulings also caused the UK to go from leader to laggard in the crypto arms race.)

Michael Saylor: Strategy's charismatic cheerleader

Strategy has been a big win for readers, having soared more than twelve-fold since I tipped it – outperforming bitcoin by a considerable margin. Strategy now has some 555,450 bitcoin, more than any other publicly traded company in the world (excluding bitcoin exchange-traded funds, or ETFs, which now hold 1.35 million). Remember, there will only ever be 21 million bitcoins (the anonymous founders of the digital currency wanted to ensure it was perceived as scarce). Saylor is also the world’s most articulate and charismatic proponent of bitcoin. The man is a genius.

He has turned Strategy from a quiet, business-intelligence software firm, which traded sideways for 20 years with a market value of less than $2 billion, into one of the most widely traded stocks in North America, worth over $100 billion. His method for doing so – extraordinarily bold at the time, though now it looks easy – was brilliantly simple. Worried about the erosion of the value of the corporate treasury owing to currency debasement and money printing during Covid, he bought bitcoin. He started slowly. Then, in buying bitcoin and using it, he caught the bitcoin bug. He started issuing paper (stock, debt, convertible notes) and bought more bitcoin.

In effect, he is creating money out of (almost) nothing and using it to buy the hardest money in the history of mankind. (Sorry, goldbugs, you know I’m on your team, but I say bitcoin is harder money, because the supply is more finite.) In doing so, he has enabled many of his investors to retire early. I think there’s a very good chance that Strategy will become a trillion-dollar company, while Saylor is likely to become the world’s richest man. But he has also set in motion something quite extraordinary. Other companies are now starting to follow his model.

To call the pre-bitcoin Strategy a zombie company is harsh, but it was not really going anywhere.

Interestingly, it is zombie or near-zombie firms with large treasuries that are most likely to follow the Saylor model. Their need for a new direction is greater.

Microsoft recently gave Saylor a mere three minutes to pitch his model to them, and duly ignored it. That’s its loss. But Microsoft is Microsoft. At present, it doesn’t need bitcoin, and it doesn’t need to take the risk. GameStop, on the other hand, is a different matter. Remember GameStop from 2021 and all those memes during lockdown? The video-game retailer had more than 3,000 outlets, and its business model was considered defunct. People buy games online now. But some private investors noted that the short position exceeded 100% of the issued shares of the company, and started buying. The ensuing short squeeze sent the stock from $17 to north of $500. GameStop closed 400 stores this year. But the company has $4.7 billion in cash, low debt, and has just raised $1.5 billion. What does it do now? Bitcoin is the answer. We don’t yet know how much it has bought.

The Japanese company Metaplanet is doing something similar. And this is an incredible story. Metaplanet had a small chain of low-budget hotels across Southeast Asia. Covid decimated the business. A year ago, seeking a new direction, CEO Simon Gerovich began copying the Saylor model and started using his cash flow to buy bitcoin. Then he began issuing debt. Since early 2024, when the firm embarked on its strategy, the stock has risen thousands of percent. Last year, it was one of the best-performing companies in the world.

Japan joins the advance

In the time that bitcoin has risen 60%, Metaplanet has risen more than 7,000%. Why? Thanks to Japan’s weak currency and suppressed bond yields, bitcoin is an obvious place for local investors to put their capital, except, as with the UK, the government has got in the way. Regulations make it very hard for Japanese investors to buy bitcoin directly.

This is due to Japan-based Mt. Gox, the first bitcoin exchange, going bust after being hacked in 2013-2014. To give you an idea of how ponderous things are, to register with a bitcoin exchange in Japan, regulators demand you get a letter by snail mail to verify your address. What’s more, when the Japanese sell, they must pay capital gains tax at 55%.

But Metaplanet is a Tokyo-listed company, so investors are buying that instead in their retirement accounts and via their brokers. Far less hassle. Metaplanet has become Japan’s bitcoin vehicle – indeed, much of Asia’s. The mother of all short squeezes seems to be taking place. It’s the most shorted stock in all of Japan, and the short-sellers couldn’t cover.

Britain’s bubble

How about this for nuts? In the UK, The Smarter Web Company (SWC), listed on the Aquis Exchange, a market for small firms, has hit a market value of £175 million. Its assets? Around £5 million in bitcoin. This bubble in SWC has been caused by state regulation and the FCA. We wouldn’t be in this situation if it was easy to buy bitcoin. It’s enough to make you a libertarian.

I know it feels as if you are late to the bitcoin story. We all wish we bought it at $10, when we first heard about it. But we didn’t. Still, this story is a long way from being over. The bitcoin treasury model is the latest evolution, and it is here to stay, because bitcoin is an infinitely better store of value than fiat money.

There are now some 70 companies employing this strategy. This will eventually become a stampede, which I urge you to front-run. Corporations have much deeper pockets than private investors, so this latest cycle in bitcoin’s mass adoption could become a mega-mania.

It’s not just GameStop. Recently, the UK’s UK Aquis-listed Coinsilium, which has been trying for years to get crypto businesses off the ground, recently raised money to follow the Treasury model. In Canada, a new vehicle, Bitcoin Treasury Corp, is raising C$125 million to list.

The problem of corporate dilution has been flipped on its head. Once, if a company issued 20% more stock, you would expect the stock to fall by a concomitant amount to reflect the dilution. But if you’re using paper to buy bitcoin, the reverse applies. You can’t dilute enough. The idea of a bitcoin treasury company is to acquire as much bitcoin as possible on behalf of all shareholders, by whatever means.

This brings us to the question of how to value bitcoin treasury companies. We have a methodology: mNAV. To calculate a company’s mNAV, you divide its market capitalisation by the value of its bitcoin treasury. The Smarter Web Company has an mNAV of 28 (a £140 million market value divided by £5 million in holdings). A higher mNAV means the company can issue new shares at a premium to its bitcoin holdings, allowing more efficient capital raising, since it acquires more bitcoin per share issued. This increases the bitcoin (BTC) yield per share. Once you have established the mNAV, you have to look at the amount of time required to cover mNAV. Can the company’s BTC yield (the amount of bitcoin it is acquiring) justify its mNAV premium?

Strategy has an mNAV of roughly two (it is valued at twice its bitcoin holdings) and its bitcoin yield in 2025 is 16%, so it will take around 19 months to cover its mNAV. The company my readers and I have gone for is Semler Scientific (Nasdaq: SMLR). Semler Scientific’s day job is to supply technology products and services to healthcare providers. Chairman Eric Semler freely admits it had become a zombie company, although it is turning a corner, he says. It has a market cap of $500 million, $100 million in debt, and 3,808 bitcoins (worth $400 million), so its mNAV is 1.2. It has a bitcoin yield of 22% year-to-date, which works out at 56% annually. It will take five months to cover its mNAV. I’m also planning to go for Gamestop (NYSE: GME) as it has a huge chance of catching the memes.

It’s not just bitcoin. Canada’s Sol Strategies is doing something similar for Solana, another cryptocurrency that has just announced a $500 million convertible note. This firm had a market cap of C$20 million a few months ago. What started as a trickle is beginning to flow. The more firms that do this, the bigger the rush will be. Companies are changing the way they store capital and the capital they store. The implications for how firms hold their treasuries are one thing. The implications for fiat money are extraordinary. Issue debt – ie, create money – and buy hard digital assets with it. This is going to be a big, big theme.

Dominic Frisby writes the investment newsletter The Flying Frisby. More at theflyingfrisby.com

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The Financial Conduct Authority (FCA) is to consult on lifting the ban on selling cryptocurrency Exchange-traded notes (ETNs) to retail investors in the UK.

ETNs are similar to an exchange-traded fund (ETF), but they are technically debt instruments that mirror the performance of a specific asset. A crypto ETN would track the price of a specific cryptocurrency, such as bitcoin.

They are available to professional investors in the UK, but the FCA has banned their sale to individual (DIY or retail) investors since 2021 – despite similar products like the iShares Bitcoin Trust having more than doubled since they were launched in the US at the start of last year.

But the decision today (6 June) could reverse this ban, as long as the crypto ETN is traded on an FCA-approved investment exchange. The sale of crypto ETNs would also be subject to financial promotion rules, to ensure that customers were aware of the risks involved and weren’t missold the investments.

“This is a landmark moment for the UK digital asset market,” said Russell Barlow, CEO of 21Shares, which issued the London Stock Exchange’s first physically-backed crypto ETNs (for professional investors) in 2024.

“We fully support the FCA’s move to provide regulated access to crypto ETNs for retail investors,” Barlow added.

Bitcoin prices hit $100,000 for the first time in December and have gone on to reach new all-time highs this year.

What is the FCA’s approach to crypto regulation?

The decision to potentially allow crypto ETNs has come as part of the FCA’s ongoing crypto regulation roadmap.

“This consultation demonstrates our commitment to supporting the growth and competitiveness of the UK’s crypto industry,” said David Geale, executive director of payments and digital finance at the FCA. “We want to rebalance our approach to risk and lifting the ban would allow people to make the choice on whether such a high-risk investment is right for them, given they could lose all their money.”

The FCA is also looking into the possibility of issuing stablecoins – cryptoassets that are pegged to a fiat currency in order to (hopefully) stabilise their value – and has consulted with the Bank of England in creating a stablecoin regime.

“We want to strike a balance in support of a sector that enables innovation and is underpinned by market integrity and trust,” said Geale.

Can UK investors buy crypto ETFs?

Technically, the products that have been green-lit by the FCA will be ETNs, but these function similarly to crypto ETFs.

Some experts hope that by allowing UK investors to buy crypto ETNs, it could lead to crypto ETFs being permitted in future.

“Hopefully it is a good omen for a future in which fully regulated derivatives and ETFs are available, giving UK retail investors real choice while keeping the traditional ‘you-could-lose-everything’ warnings front and centre,” said Dan Moczulski, managing director at eToro UK. “Perhaps it also nudges us closer to the day when a crypto ETF will be able to sit inside a stocks and shares ISA, meaning more freedom for tax-savvy investors.”

It isn’t yet clear when DIY investors in the UK will be able to buy crypto ETNs. A consultation on the proposal is taking place until 7 July.

If investors want to gain exposure to crypto price movements, there are some options already available to them.

They could buy a stock like MicroStrategy, which was one of the most-bought stocks during May on Interactive Investor. MicroStategy is the world’s largest corporate holder of bitcoin; its CEO Michael Saylor is a bitcoin proponent and has been accumulating the cryptocurrency on the company’s balance sheet since August 2020.

Be warned, though, that because MicroStrategy uses leverage (i.e. debt) to do this, its share price can be even more volatile than bitcoin prices.

For less volatility, whilst still offering exposure to crypto market movements, investors could select a crypto-related ETF, like the Invesco CoinShares Global Blockchain UCITS ETF (LON:BCHN). This holds crypto-related stocks like MicroStrategy and Coinbase, as well as other companies that are making use of the broader world of blockchain technology, such as MercadLibre.

Firms selling cryptocurrencies will soon have to face the same standards as traditional financial companies, under planned new rules from the Treasury.

Crypto exchanges, dealers and agents offering services for cryptoassets like Bitcoin and Ethereum will be brought into the scope of financial regulators as part of the incoming changes, so they are better policed.

What will new cryptoasset rules mean?

Crypto firms with UK customers will have to meet clear standards on transparency, consumer protection, and operational resilience – just like firms in traditional finance.

The aim is to crack down on scammers and other “bad actors”, better protecting millions of people across Britain, while supporting legitimate innovation, the Treasury says.

Around 12% of UK adults now own or have owned crypto, up from just 4% in 2021. But too often, the Treasury says, consumers have been left exposed to risky firms and scams.

At a major summit in London to mark UK Fintech Week, the chancellor Rachel Reeves revealed the UK has published draft legislation for regulating cryptoassets.

Reeves said on Tuesday: “Robust rules around crypto will boost investor confidence, support the growth of fintech and protect people across the UK.

“Today’s announcement sends a clear signal: Britain is open for business – but closed to fraud, abuse, and instability.”

Final cryptoasset legislation will be put in place after talks on the draft provisions with the crypto sector.

The chancellor also said discussions were underway with the US about supporting the use and responsible growth of digital assets, as part of the UK Labour Government’s Plan for Change.

This follows discussions in Washington between the Chancellor and the US Treasury Secretary, Scott Bessent, where they also discussed opportunities to support businesses to innovate on both sides of the Atlantic.

This includes greater collaboration on digital securities between the UK and US, including the proposals put forward by SEC Commissioner Hester Peirce for a transatlantic sandbox for digital securities – a way to trial new technologies and practices.

The Chancellor also announced the government will publish the first-ever Financial Services Growth and Competitiveness Strategy on 15 July, alongside her Mansion House speech.

This aim is to “support the financial services sector’s long term growth”, with fintech identified as a “priority sector”, and to help it finance investment and growth across the UK, the Treasury says.

The price of Bitcoin has been one of the most-asked questions of Amazon’s virtual assistant, Alexa, in the UK over the past 12 months as the value of the cryptocurrency continues to soar.

According to figures from the tech giant, which cover September 2023 to November 2024, pop star Taylor Swift and Bitcoin were named among the most popular Alexa queries of 2024.

The findings come as Bitcoin hit $100,000 for the first time earlier this month, with the cryptocurrency having benefitted from a “Trump bump” in the wake of Donald Trump's US election win.

It is a milestone for the asset class, which has been propelled into mainstream conversation in recent years. But investors should remember that Bitcoin is a highly speculative and unregulated investment – meaning it is not suitable for all investors and should only ever form a small portion of a broadly-diversified portfolio.

“During the election campaign, Donald Trump promised to make the US ‘the crypto capital of the planet’, build a strategic reserve of Bitcoin if he returned to the White House, and he also set up his own crypto venture,” says Dan Coatsworth, an analyst at investment platform AJ Bell.

“Traders and investors took this to represent the ultimate endorsement of crypto and piled into Bitcoin as soon as the election result was called.”

What drives the Bitcoin price?

The election result is a perfect example of the sort of environment that drives the Bitcoin price – bullish sentiment.

While sentiment is a driver of all asset classes, investments like stocks and bonds also have market fundamentals that analysts can examine in an attempt to get a better understanding of their ‘true value’.

Each time Apple announces its quarterly earnings, for example, investors can look at its revenue, profit, capital expenditure, cash flow, and more. They can assess the potential impact of any new product releases on the outlook for the share price going forward.

Some stocks also pay a regular dividend. This can help compensate investors when share price growth is not strong, or soften the blow of losses.

Meanwhile, there are very few market fundamentals behind the Bitcoin price other than supply and demand. Bitcoin does not have any earnings and it does not pay an income, meaning its value is almost entirely driven by sentiment.

This means cryptocurrencies are highly volatile and large swings in the Bitcoin price can result in devastating losses. If you want to ride the hype, this is a prospect you need to be comfortable with.

What is next for the price of Bitcoin?

So, will the Bitcoin price rise higher? The answer is anyone’s guess, but some analysts say sentiment remains strong.

“US-listed business intelligence group MicroStrategy raised more than $7 billion through issuing shares and convertible bonds, and plans to use the proceeds to buy more Bitcoin on top of the 279,420 units it already owns (worth $28.4 billion),” says Coatsworth.

“That sent a big signal to the market that MicroStrategy remains bullish on the cryptocurrency even after the recent price rise, and investors raced to load up ahead of the company’s signalled buying spree.”

On top of this, investors expect Trump’s second term to bring a more relaxed regulatory environment, which could prove supportive for the Bitcoin price.

In a recent move, Trump nominated crypto-friendly Paul Atkins to be the next chair of the US Securities and Exchange Commission (SEC), writing on his social media site Truth Social that Atkins “recognises that digital assets and other innovations are crucial to Making America Greater than Ever Before”.

How to buy Bitcoin

Firstly, it must be stated that Crypto is not suitable for beginners or those who are unwilling to accept large losses.

But if you do want to proceed, then perhaps the easiest and most common method of buying Bitcoin is via one of any number of the popular cryptocurrency exchange sites, such as Gemini, Kraken or Crypto.com.

Once you have chosen your exchange, you then simply sign up, top up your account using one of the methods they have available, such as via debit card, and transfer your balance into Bitcoin.

You can then buy and sell Bitcoin on the exchange, or remove it from the exchange by downloading a digital wallet on your phone or other device.

If you prefer some sort of listed option, then you could buy Microstrategy (Nasdaq: MSTR), which has become something of a proxy for Bitcoin, and there is also London-listed bitcoin miner Argo Blockchain (LSE: ARB). Perhaps easiest of all is the Vaneck Vectors Digital Assets ETF (LSE:DAGB), through which you are gaining exposure to a basket of all the listed bitcoin companies. It is not the same as owning Bitcoin, but it is a start.

Bitcoin hit $100,000 for the first time on Thursday, with the cryptocurrency having benefitted from a “Trump bump” in the wake of the US election result. Investors have been following the Bitcoin price for some weeks in anticipation of this moment.

It is a milestone for the asset class, which has been propelled into mainstream conversation in recent years. But investors should remember that Bitcoin is a highly speculative and unregulated investment – meaning it isn’t suitable for all investors and should only ever form a small portion of a broadly-diversified portfolio.

“During the election campaign, Donald Trump promised to make the US ‘the crypto capital of the planet’, build a strategic reserve of Bitcoin if he returned to the White House, and he also set up his own crypto venture,” says Dan Coatsworth, investment analyst at AJ Bell.

“Traders and investors took this to represent the ultimate endorsement of crypto and piled into Bitcoin as soon as the election result was called.”

What drives the Bitcoin price – and what are the risks?

This is a perfect example of the sort of environment that drives the Bitcoin price – bullish sentiment.

While sentiment is a driver of all asset classes, investments like stocks and bonds also have market fundamentals that analysts can examine in an attempt to get a better understanding of their ‘true value’.

Each time Apple announces its quarterly earnings, for example, investors can look at its revenue, profit, capital expenditure, cash flow, and more. They can assess the potential impact of any new product releases on the outlook for the share price going forward.

Some stocks also pay a regular dividend. This can help compensate investors when share price growth isn’t strong, or soften the blow of losses.

Meanwhile, there are very few market fundamentals behind the Bitcoin price other than supply and demand. Bitcoin doesn’t have any earnings and it doesn’t pay an income, meaning its value is almost entirely driven by sentiment.

This means cryptocurrencies are highly volatile and large swings in the Bitcoin price can result in devastating losses. If you want to ride the hype, this is a prospect you need to be comfortable with.

So, will the Bitcoin price rise higher? The answer is anyone’s guess, but some analysts say sentiment remains strong.

“US-listed business intelligence group MicroStrategy raised more than $7 billion through issuing shares and convertible bonds, and plans to use the proceeds to buy more Bitcoin on top of the 279,420 units it already owns (worth $28.4 billion),” says Coatsworth.

“That sent a big signal to the market that MicroStrategy remains bullish on the cryptocurrency even after the recent price rise, and investors raced to load up ahead of the company’s signalled buying spree,” he adds.

On top of this, investors expect Trump’s second term to bring a more relaxed regulatory environment, which could prove supportive for the Bitcoin price.

In a recent move, Trump nominated crypto-friendly Paul Atkins to be the next chair of the US Securities and Exchange Commission (SEC), saying on Truth Social that Atkins “recognises that digital assets and other innovations are crucial to Making America Greater than Ever Before”. Atkins will need to be confirmed by the US Senate before securing the role.

This could signal a change in direction when it comes to the regulatory backdrop. Current SEC chair Gary Gensler has taken a cautious stance on crypto, comparing it to the “wild west” on account of the “fraud, scams and abuse” within the asset class. Gensler will step down from his current role on the day of Trump’s inauguration.

What’s next for crypto assets and the Bitcoin price?

Despite the risks, crypto does appear to be solidifying its position in the mainstream. This has made it difficult for regulators and institutional investors to ignore. Here in the UK, the Financial Conduct Authority recently announced a UK crypto regulation roadmap, and plans to make it a fully regulated asset class by 2026.

“Institutional interest and regulatory shifts are adding legitimacy, turning what once seemed like a fringe asset into a force reshaping finance,” says Matt Britzman, senior equity analyst at Hargreaves Lansdown. Whether you love or hate Bitcoin, Britzman says it is “rewriting the rulebook for digital assets”.

If more institutional investors wade into the market as crypto becomes more mainstream, it could prove supportive for the Bitcoin price. We saw something similar at the start of this year when spot Bitcoin ETFs were approved in the US for the first time.

“This development opened the door for a new wave of investors, those who previously maybe were hesitating about accessing crypto wallets or didn't have direct ownership in Bitcoin or access,” says Monika Calay, head of passive strategies for Morningstar.

“Essentially, it brought Bitcoin to the mainstream investment portfolios for the first time. And naturally, the momentum picked up as investors began chasing performance, which increased demand and the price.”

While all of this might sound compelling, it is important to temper your enthusiasm with a careful consideration of the risks. Crypto isn’t suitable for beginners or those who are unwilling to accept large losses.

If you still want some exposure in the hope of benefitting from greater crypto demand, you could consider a small allocation as part of a broadly-diversified portfolio. Traditional assets like equities and bonds should form the main part of your strategy.

Whatever else he does in his life, Justin Sun will always be known as the “banana” guy – having outbid six other contenders to secure a prime piece of the fruit for $5.2 million (plus $1million in fees) at Sotheby’s New York last week. Of course, it wasn’t just “any old banana”, says The Observer. The centrepiece of an installation called Comedian by Italian artist Maurizio Cattelan, it comes with 14 pages of instructions, a strip of duct tape to attach it to a wall, and is intended to be “frequently refreshed” or, indeed – as at its 2019 debut at Art Basel in Miami – eaten. The value lies in the “certificate of authenticity”.

Sun, the Chinese founder of the Tron blockchain and cryptocurrency, might have bought the piece for “a bit of fun”, says Fortune. But it’s already proving handy in terms of currying favour with the new regime in Washington. “I’m willing to donate my banana to Elon Musk, tape it to the body of a SpaceX rocket, and send it to both Mars and the Moon,” he posted on X.

Like Donald Trump himself, Sun is highly invested personally in a relaxation of law enforcement. He must hope there are good odds that a Trump-led Securities and Exchange Commission (SEC) will drop the charges he faces for “fraud and other securities violations” as it “resets its approach to cryptocurrencies”.

The booming crypto Trump trade, meanwhile, has given him largesse to spare, says Crypto.news. Tron (TRX) has been “one of the top-performing coins”, enjoying 80% year-to-date gains, while the company has shot to a market capitalisation of more than $17 billion – due to its emergence as one of the big players in “stablecoin” payments. The Tron network handled Tether tokens worth more than $196 billion in one day on 22 November. “Its average daily volume is often higher than that of Visa.”

Sun, 34, is one of a generation of Chinese entrepreneurs caught in limbo between the superpowers. An “arch internationalist”, he reportedly has a Maltese residency card and, a few years back, got himself appointed as Grenada’s ambassador to the World Trade Organisation, in hopes of promoting the Caribbean island as the test bed of a blockchain-driven economy. Last month, says The Telegraph, he became prime minister of the “bitcoin micronation” of Liberland – a patch of land on the banks of the Danube and “an experiment in crypto-sovereignty”.

Born in Xining, in China’s Qinghai province, Sun studied history at Beijing’s elite Peking University and then headed for the University of Pennsylvania for a masters in East Asian studies. During his time in the US, Sun encountered bitcoin for the first time and was smitten by its immense potential and disruptive power, says Quartz. He invested and by the time he returned to China in 2013 – with a role as chief representative and adviser to the US firm Ripple Labs’ under his belt – was already one of the youngest crypto millionaires. Sun’s prowess caught the eye of Jack Ma, the founder of e-commerce giant Alibaba, who recruited him to join his elite business school, Hupan University, says The Telegraph.

What's next for crypto mogul Justin Sun?

After launching Tron, Sun staged an Initial Coin Offering (ICO) in Beijing, days before the government banned them, and flew to San Francisco with the proceeds. Last year, he was sued by the SEC for allegedly trying to inflate the price of tokens through social media hype and by engaging in “wash trades” to inflate trading volumes. Sun is thirsty for success, with “seemingly limitless energy”, noted The Verge in 2022. In 2023, he proposed buying collapsed Swiss investment bank Credit Suisse for $1.5 billion to “integrate it into the Web 3.0 world”, says the Financial Times. Imagine the consternation in Zurich! Part shock-jock, part financial visionary, Sun is bent on impressing himself on mainstream finance and culture. The banana is just the start.

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The UK’s Financial Conduct Authority (FCA) has announced its roadmap to fully regulate crypto assets by 2026, as it aims to support a “safe, competitive and sustainable” market for cryptocurrencies in the UK.

Matthew Long, director of payments and digital assets at the FCA, said that the regulator is “committed to working closely with the Government, international partners, industry and consumers to help [it] get the future rules right”.

“A comprehensive regulatory regime for crypto will provide the clarity and confidence needed to encourage further innovation and growth within the sector,” said Dan Moczulski, UK managing director at investing platform eToro.

The FCA is proposing a series of consultation and discussion papers between now and 2026 in order to establish a regulatory framework for crypto assets.

This roadmap will begin with discussion papers on market abuse as well as admission and disclosures during Q2 2024, with consultation papers on stablecoins, custody and and prudential elements expected during the first half of 2025.

The roadmap finishes with the publication of final policy statements in 2026.

It is seen by many as an attempt to catch up with similar regulatory frameworks in the EU, which put its Markets in Crypto Assets Regulation (MiCA) regulation into effect in June 2023, and the US, which is currently clarifying its own regulatory stance towards crypto assets through the Financial Innovation and Technology for the 21st Century Act (FIT 21). President-elect Donald Trump is also expected to be highly pro-crypto during his second term.

Cryptocurrencies, such as Bitcoin and Ethereum, are currently unregulated assets in the UK. This means that, at present, money invested into the crypto ecosystem is not protected by the kinds of rules that govern more conventional investments. Crypto investors don’t have access to the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS), for example, if something goes wrong with their investment.

This adds extra risk into investing directly in crypto, on top of the risk inherent in the generally high volatility of crypto assets.

However, results from the FCA’s latest research on consumer behaviours and attitudes towards crypto show that approximately one in three people are unaware of this, and believe that they could raise a complaint with the FCA if they needed recourse or financial protection regarding a crypto investment.

“There is often a perception that this is a more regulated space than is the case, which is worrying,” said Chris Recker, a legal director at law firm Kingsley Napley who specialises in digital asset disputes. “Not only can people lose their investment due to poor investment decisions but scammers frequently operate in this sector duping people out of sizeable sums.”

UK’s crypto ownership on the rise

The FCA’s research also shows an increase in crypto ownership among British investors.

Twelve percent of UK adults now own crypto, according to the research, up from 10% in its previous findings.

The average value of crypto held has increased from £1,595 to £1,842, while awareness of crypto has increased from 91% to 93%. The FCA’s survey shows that family and friends were the most common source of information for new crypto buyers.

Just one in ten respondents said that they do not carry out any research before buying crypto.

With increased ownership comes the increased prevalence of crypto scams. As the FCA moves towards adopting a regulatory framework for crypto, it has underscored its determination to stamping out opportunities for scammers to take advantage of consumers via such scams.

The FCA claims to have taken down over 900 scam crypto websites and over 50 apps since it became responsible for regulating crypto asset promotion in October 2023.

“There are steps that can be taken to attempt to trace and recover funds and crypto assets, including by way of urgent interim remedies such as disclosure orders and freezing injunctions,” said Recker, “but there is no failsafe or guaranteed route to recovery.”

How to invest in crypto

For the reasons outlined above, investors shouldn't invest in crypto unless they are willing to lose all of the money they put in. If you are aware of the risks but still want some direct exposure, you could consider a small allocation as part of a broadly-diversified portfolio.

Besides buying crypto directly via a crypto exchange (though, as above, beware of scams and research these thoroughly), you could invest in a proxy for the crypto market. Stocks like crypto exchange Coinbase (NASDAQ:COIN) or Bitcoin miner MARA Holdings (NASDAQ:MARA)tend to trade in correlation with crypto prices, particularly Bitcoin.

Technology firm MicroStrategy (NASDAQ:MSTR) tends to experience more dramatic movements than Bitcoin because its management uses debt in order to add Bitcoin to its balance sheet. It has become the world’s largest corporate holder of Bitcoin in doing so, and is extremely exposed to changes in the Bitcoin price.

Alternatively, an ETF that concentrates on blockchain-related companies such as the iShares Blockchain Technology UCITS ETF (LSE:BLKC) will likely demonstrate some correlation to crypto prices.

It is important to note, though, that there are thousands of cryptocurrencies that aren’t necessarily correlated with one another’s price movements. Proxies like these tend to be correlated with Bitcoin as the most well-known cryptocurrency (MARA and MicroStrategy especially so given their businesses are directly linked to Bitcoin in particular).

In the US, investors can buy ETFs that directly track the spot price of Bitcoin and Ether. At present the FCA doesn’t allow individual investors to buy such ETFs, but this is one area that may come up for review during its consultation process.

Even through vehicles like these, however, crypto investing is incredibly risky. It is a highly volatile asset class, and investors should be prepared to lose all the money they put in, regardless of whether or not they fall victim to a scam.

Bitcoin prices have soared in recent weeks, gaining 172% in the previous 12 months and 45% in the past month alone.

The Bitcoin price has never hit $100,000 in its history but that threshold could soon be breached.

Wes Wilkes, chief executive at Net-Worth NTWRK, says that "$100,000 bitcoin seems inevitable.”

Donald Trump winning re-election to the White House is the major catalyst for the digital asset's recent push towards $100,000.

“Investors are flocking to Bitcoin in a digital gold rush, and the whole cryptocurrency market continues to show unbridled enthusiasm,” says Gabriel McKeown, head of macroeconomics at Sad Rabbit Investments.

Can bitcoin stay above $100,000?

Bitcoin may well hit $100,000 in the coming days. Staying there could be harder.

McKeown says that, while the potential for gains even at current levels remains, “with bucketloads of economic uncertainty still on the horizon, there is substantial downside risk”.

Bitcoin’s reputation as a volatile asset is well-earned. While tipping over $100,000 could be interpreted as a signal of its increasing prominence as an asset class, it could also lead to profit-taking, which could prompt a rapid pullback.

So, should you invest in Bitcoin as it nears $100,000?

“Investors should remember that Bitcoin tends to act more as a speculative asset, and the price of cryptocurrencies can fluctuate dramatically based on market sentiment and a FOMO mentality,” says McKeown.

Simon Peters, crypto analyst at eToro, offers a more optimistic outlook over the longer term. “Even with the $100k milestone reached, we would still be reasonably early in this bull market if past years and cycles are anything to go by," he tells MoneyWeek.

"Historically the peak of the bitcoin bull market has formed 12-18 months after the block reward halving." This happened most recently in April 2024.

However, Peters also acknowledges the potential for sharp drawdowns. "If the price reaches as significant a milestone as $100,000 against the backdrop of the holiday season, I wouldn't be surprised to see a pull back from this level, as investors take some money off the table before the trend continues on.”

How have the halving and bitcoin ETFs pushed bitcoin to $100,000?

In January this year, the Securities and Exchange Commission (SEC) approved the launch of ETFs that track the spot price of Bitcoin in the US for the first time ever.

These products are viewed as having had a major impact on the price of Bitcoin, as they increased the accessibility and availability of the cryptocurrency.

The funds registered inflows of approximately $8 billion in their first two months, and marked a milestone of institutional interest as the financial institutions behind the ETFs – such as BlackRock (NYSE:BLK), which launched the iShares Bitcoin Trust ETF (NASDAQ:IBIT) – added Bitcoin to their balance sheets in response.

“We’ve seen some of the biggest and the oldest investment companies in the world create ETFs to hold and trade the assets in the US,” says Wilkes.

The ETF launch was followed by April's Bitcoin halving, an event that happens roughly every four years and is designed to restrict the supply of Bitcoin. This is capped regardless – a maximum of 21 million Bitcoin will ever be mined – but the halving cuts the reward bitcoin miners are paid in half, lowering the speed at which new Bitcoins come into circulation.

This engineered scarcity is another upward pressure on the Bitcoin price.

Will the US start buying bitcoin?

With these tailwinds having pushed Bitcoin prices to above $70,000 by March, the next major catalyst in Bitcoin’s approach to $100,000 was Donald Trump’s US election win.

The president-elect adopted a strongly pro-crypto posture during his election campaign, and since the result on 6 November Bitcoin has gained approximately 30% on optimism for the crypto-friendly policies his administration could adopt.

This could potentially include building a strategic Bitcoin reserve, which would see the US state start to buy the cryptocurrency. The chances of this happening increased recently following last week’s introduction of the Pennsylvania Bitcoin Strategic Reserve Act, which aims to allow the state of Pennsylvania to invest up to 10% of certain funds into Bitcoin.

However, Faisal Sheikh, managing director of Monmouth Capital, downplays the chances of this, arguing it would be against the US’ interests to support Bitcoin’s widespread adoption by central banks or as an international means of exchange.

“Trump holding a fistful of Bitcoin wouldn’t be of much use if the Dollar ceased to be the world’s reserve currency,” he says. “Is the US federal government really going to let that happen?”

The most obvious narrative for future economic historians probably goes something like this. In the early 21st century, politicians lost control of spending. Debt rose much faster than GDP. Then, inflation made it much harder for central banks to continue printing money. But as soon as inflation moderated, in 2024, they went back to their old habits – lowering interest rates and inducing more and more people to borrow and spend.

By then, lowering interest rates was no longer an option – it was a necessity. The authorities needed low rates to finance and re-finance their runaway deficits. But investors became reluctant to lend more money to a borrower who was clearly going broke. Interest rates rose and the only recourse was to print money – trillions. The result was more inflation – the defining feature of the 2024-2034 period.

The International Monetary Fund reports that governments are creating a “$100 trillion fiscal time bomb”. When government bases its fiscal policy on large quantities of printed money, the system becomes unstable. There is no strategy the feds can use to defuse the bomb.

In plain English, if they continue printing more and more dollars, people will soon want no more dollars. They’ll look for alternatives. A “time bomb” is only useful if it blows up. And a crime must have a victim. People – not wanting to get blown up – seek shelter. This is the problem the US Federal Reserve will face in the future, as a report from the Minnesota Fed, entitled Unique Implementation of Permanent Primary Deficits?, understands. Governments can only run permanent budget deficits if there is no escape route into bitcoins, so they must be banned or taxed to death.

In 1971, a saver might have worked hard his entire career to lay aside $100,000. By 2024, that would have been devalued by about 90%. He was cheated out of $90,000. That’s why an inflationary system is unstable. People try to protect themselves. If they succeed, the policy fails. Or, to put it differently, inflation is just an underhanded way to tax people. But it only works as long as someone “pays” the tax. Let’s imagine a “revolt of the masses”. Alert to the scam, and seeing more and more debt, and more and more money printing, consumers might switch to gold or bitcoin, instead. Then, the government is forced into the “balanced budget trap”, because it can no longer borrow at reasonable rates and no one wants its printed currency.

This time a year ago, Argentina was almost there. People were so fed up with inflation and so savvy about how to avoid it, they were switching to dollars as fast as they could. Almost all substantial real-estate prices were quoted in dollars, not in pesos. Machinery and equipment, most of it imported, were priced in dollars, too. Online remote workers were paid in dollars, or bitcoin. And cab drivers, waiters and hairdressers were happy to get dollars whenever they could. The elites were beginning to realise they could no longer exploit the masses with inflation. Then, it was almost as if they wanted to lose the election and leave the mess to someone else to clean up.

As for the US, the rich can easily switch out of dollar-dependent assets and into stocks, commodity, gold or property funds. But what about consumers? Couldn’t they just move to bitcoin to avoid the inflation tax? No wonder some are beginning to ponder banning it.

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US election outlook
America’s seven battleground states are all polling within a percentage point or two, ahead of the presidential election says pollster Nate Silver in The New York Times. Odds of 50-50 for Donald Trump versus Kamala Harris “is the only responsible forecast”. But if pushed, “my gut says Donald Trump”.

Traders have the same intuition. On top US betting markets, Trump has more than 60% odds of winning next week, with Harris below 40%. In financial markets, the “Trump trade” is back, says the Dealbook column in the same paper. Oil firms and cryptocurrencies – which should do well under the Republican – are rallying.

Though Trump wants a weaker dollar, the greenback is rising as markets move to price in the inflationary impact of his tariff plans. Bitcoin is the “quintessential Trump trade”, says Richard Abbey on Bloomberg. Trump’s promises to support deregulation have made him “the darling” of the crypto industry. Bitcoin has leapt more than a third since early September, tracking Trump’s rising chances of winning.

For financial markets, the biggest impact could come from higher bond yields (bond yields move inversely to prices). Investors have been selling off US government debt on expectations that a Trump administration will let inflation rip. Yields on the benchmark US ten-year Treasury have risen from 3.6% in September to 4.2% now, a “massive move” in bond-market terms, says Ben Levisohn in Barron’s. The story goes that Trump will be more spendthrift than Harris, necessitating higher borrowing costs for the US Treasury.

Investing with your politics is a bad way to lose money...

Still, reading the tea leaves is rarely straightforward. The bond spike could have just as much to do with strong US growth and bets on slower rate cuts ahead. History shows that “investing with your politics is one of the worst ways to lose money”. US equities tend to rise “regardless of which party controls the White House”. Forces beyond domestic politics ultimately matter more for investors, agrees Jim Reid of Deutsche Bank. Energy shares, for example, did far better under Joe Biden than they did under pro-fossil-fuel Trump.

Regulation matters, but world events are more decisive. There is now an “overwhelming consensus” among hedge funds that Trump is heading for victory, says Katie Martin in the Financial Times. That could be a misreading of polls that still show a virtual “coin toss”. Some “big egos” on Wall Street will look very silly if Harris prevails. Indeed, “market pricing is a lot more cautious”, says George Saravelos of Deutsche Bank. For now, the US stocks most sensitive to Trump’s tariff plans are “moving sideways”, rather than selling off.

Similarly, the euro, which could approach parity with the dollar in a full-blown trade war, is still at $1.08. “Hesitant to make big wagers that could jeopardise this year’s strong gains”, some asset managers are cutting market exposure before the vote, says Caitlin McCabe in The Wall Street Journal. This year has served up market-negative election surprises in Mexico, India and France, says Zachary Kurz of PinnBrook Capital. Why should the US be any different?

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Bitcoin has been an extremely lucrative asset for those who invested when it first took off. Even if you had bought as late as four years ago, and simply held on, you would be looking at a very good return. However, since early 2021, bitcoin has been a lot more volatile, prone to large rises and falls. 

Owing to this volatility, many people have turned to bitcoin mining – the process of using brute computer power – to unlock more bitcoins. However, even this is starting to become unprofitable, which is bad news for bitcoin miners such as Riot Platforms (Nasdaq: RIOT). 

There are several big problems with bitcoin mining. In order to protect the value of bitcoin, the designers set a limit to the total number of bitcoins that can be unlocked, with the amount of effort to unlock each bitcoin increasing at regular intervals the more that bitcoin is mined. 

This means that companies engaging in bitcoin mining have to keep increasing their amount of processing power, which requires large amounts of capital investment. This, in turn, requires more and more energy, which is controversial at a time when there is a major emphasis on trying to reduce carbon emissions.

The problem with Riot Platforms 

Perhaps the most pressing problem is the increasing amount of competition. As short seller Kerrisdale Capital points out, bitcoin mining is global in nature, with miners from around the world competing to mine bitcoin ever more cheaply. 

Even miners in areas like Texas (where Riot is located), which is regarded as the most bitcoin-friendly part of the US thanks to relatively light regulation and cheap energy, are finding it difficult to compete with rivals from Africa and South America, which have much lower labour costs and can access cheap Chinese equipment more easily. 

As a result, even as bitcoin soared, Riot has struggled to make money. It has made a loss in five of the last six years (only in 2023 did it manage to produce earnings). While it hopes to make a small profit next year, even the most optimistic estimates have it trading at 58 times 2025 earnings, the sort of valuation you would associate with a successful company, not one bleeding red ink. 

The losses, combined with the constant need for capital to upgrade equipment, have forced the group to keep issuing additional shares, diluting shareholders – usually a sign of a company in trouble. 

Given these fundamental problems, it is hardly surprising that Riot’s shares have done poorly recently, suggesting that they have further to fall. They are trading well below both the 50-day and 200-day moving averages and have also lagged the wider stock market; they have halved since December. I would therefore suggest that you short them at the current price of $7.20 at £200 per $1. I would put the stop loss at $12, which would give you a total downside of £960.

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In January this year, cryptocurrencies took a further step into the mainstream when the US Securities and Exchange Commission (SEC) approved the first cryptocurrency exchange-traded products (ETPs). There are now around two dozen crypto ETPs available to US investors, and the biggest, iShares Bitcoin Trust, has around $20 billion of assets under management. 

Crypto ETPs will make it easier to trade this volatile market, since ETPs can be bought and sold through a broker just like a regular share. However, these instruments are not yet available to UK retail traders, who cannot buy most US-listed ETPs as they don’t comply with UK regulations and are not tradeable through UK brokers that offer US stocks. 

The Financial Conduct Authority (FCA) has approved cryptocurrency ETPs to list on the London Stock Exchange, but it is taking a very restrictive approach that limits access to professional investors. In May, the FCA approved ETPs from three providers – WisdomTree, 21Shares and Invesco. More are expected to follow. These funds aim to track the spot price of bitcoin and ether, and the cheapest have fees in the range of 0.2%-0.4%. 21Shares also offers ethereum “staking” ETPs, which means committing a proportion of your crypto (a minimum of 32 ether – around £64,000 at today’s prices) to validate transactions on the blockchain, create new blocks and maintain the network, giving holders an income from their assets. 

Yet the FCA is far more cautious on crypto than many other regulators. “The FCA continues to believe cETNs [cryptoasset-backed exchange traded notes] and crypto derivatives are ill-suited for retail consumers due to the harm they pose,” it said in March. “As a result, the ban on the sale of cETNs (and crypto derivatives) to retail consumers remains in place.” There is no sign of that stance changing, which does not appear very pragmatic. Many retail traders clearly want to hold crypto and it would surely be less risky to let them buy transparent products under UK regulations. 

Since the FCA banned trading crypto via derivatives in March 2021, you can’t access it via spread-betting firms and contracts for difference. You can only buy crypto tokens directly, which means you are making an unregulated investment that is not overseen by the FCA, the Financial Services Compensation Scheme (FSCS) and the Financial Ombudsman Service (FOS). 

First, you’ll need to choose a platform. There are many, but three of the better-known are Coinbase, Kraken and Binance. You’ll need to verify your identity to satisfy the platform’s know-your-customer (KYC) and anti-money-laundering (AML) measures. You’ll also need a bank that allows payments to crypto exchanges: many don’t and those that do may have limits on the value of transactions. 

Once you’ve bought crypto, you need to decide where to store it. You can keep it at the exchange, but this exposes you to some risk of fraud or theft by hacking (you should only use the biggest and most credible exchanges, but even these have had problems with hacks and worse – the now-defunct FTX was once the third-largest in the world). The alternative is sending it to your own “wallet”: a “hot” wallet on your computer or smartphone, connected to the internet; or a “cold” wallet that is disconnected from the internet. Yet setting this up is more complicated – and if you lose or throw away the device your wallet is on, goodbye crypto. 

The choices may get slightly better. In May, Interactive Brokers began letting UK clients hold cryptocurrencies via Paxos, a US-based crypto company. These are still not covered by the FCA, the FSCS and the FOS, but at least you would be going through a major global broker that is FCA-regulated. Yet crypto is in a needlessly messy situation. The FCA is right when it says: “Cryptoassets are high risk and largely unregulated. Those who invest should be prepared to lose all their money.” But it could reduce some risks by letting retail traders use regulated ETPs.

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Bitcoin prices hit a six-week high after Donald Trump threw his weight behind the crypto industry, say Jack Simpson and Dan Milmo in The Guardian. The Republican presidential candidate told delegates at the Bitcoin 2024 conference in Tennessee that he would end the “persecution” of crypto by regulators. He also suggested that instead of selling bitcoin that is seized in police raids, the government could keep them as part of a national stockpile. 

Trump’s pledge that “on day one” he will fire Gary Gensler, chair of the US Securities & Exchange Commission (SEC), drew particularly strong applause from the crowd. Gensler has described bitcoin as “primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion and terrorist financing”. 

Gensler’s SEC has launched more than 40 crypto-related enforcement actions since 2023. Trump used to agree with Gensler, say Jack Simpson and Dan Milmo. In 2019, the then-president said that bitcoin was “highly volatile and based on thin air” and that “we have only one real currency in the USA… It is called the… dollar!” But he has since done a U-turn, saying that “if crypto is going to define the future, I want it to be mined, minted and made in the USA”. 

Trump is right that regulators have often unfairly targeted crypto operators, says The Wall Street Journal. Gensler’s SEC has sued crypto companies for violating securities laws when its own rules make compliance with those laws almost impossible. 

Still, bullish talk of a “strategic national bitcoin stockpile” sounds imprudent given bitcoin’s infamous volatility. Politicians should not be in the business of picking winners. “If cryptocurrencies really are a libertarian vehicle to invest free from political vagaries, then they should trade on their own without government help.”

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Until a few years ago, the topics of bitcoin and cryptocurrency were incredibly niche. They fell firmly into the domain of “tech bro” investors who were willing to accept large swings in the value of their investments, hoping to make it or break it in a gamble on the asset class.

More recently, however, bitcoin has worked its way out of the Reddit forum and into mainstream conversation. While crypto investments are still largely unregulated, an increasing number of investors are considering a small allocation to the asset class in their portfolios. What’s more, the cryptocurrency recently reached a record price.

Last week, the asset class was trending in the news again thanks to the practice of “bitcoin halving”. This is a process which aims to control the supply of bitcoin, thereby protecting the value of the currency and preventing inflation. It takes place once every four years and can have a large impact on its value. 

The latest bitcoin halving took place in the early hours of Saturday morning (UK time). Since then, the price of the cryptocurrency has climbed. But will it continue to do so? We take a closer look at how the halving event works, and what it could mean for the fortunes of the asset class.

What is bitcoin halving?

To understand how bitcoin halving works, you need to know a bit about “bitcoin mining”, the process which brings new bitcoin into circulation.

When bitcoin was first created in 2009, the anonymous developer (or group of developers) known as Satoshi Nakamoto programmed a series of rules into the cryptocurrency. For example, to help protect the value of bitcoin, it was decided that a maximum number of 21 million coins would be brought into circulation. Currently, there are almost 19.7 million bitcoin in existence. 

New coins are brought into circulation through a process known as mining. Bitcoin miners use computer technology to carry out this process. Put simply, the mining process involves solving a maths problem. Once solved, an official record of the bitcoin transaction is entered into a ledger (or database) known as “blockchain”. In exchange for their work, the first miner to solve the maths problem is rewarded in bitcoin. 

As there is a finite number of bitcoins (21 million), the size of the reward or payment the miners receive is halved every four years to slow the rate of mining. When bitcoin was first created, miners received 50 bitcoin for every transaction. This has been halved four times since then, and now stands at 3.125 bitcoins.

When does bitcoin halving take place?

Bitcoin halving takes place roughly once every four years. The most recent bitcoin halving took place in the early hours of Saturday morning (UK time), on 20 April 2024.

Here is a full list of previous bitcoin halving dates:

• 28 November 2012 (bitcoin reward halved to 25 coins)
• 9 July 2016 (bitcoin reward halved to 12.5 coins)
• 11 May 2020 (bitcoin reward halved to 6.25 coins)
• 20 April 2024 (bitcoin reward halved to 3.125 coins)

What impact has bitcoin halving had on the value of the cryptocurrency?

Before the halving event even took place, bitcoin had been soaring to new heights. According to Jason Hollands, managing director at Evelyn Partners, this was partly in anticipation of the halving event, but also a result of bitcoin making its way into mainstream investment funds.

“Bitcoin’s resurgence looks like it’s being driven by its adoption into mainstream investment products in the US”, he said. “In January, US regulator the Securities and Exchange Commission authorised the first spot Bitcoin ETFs, which began trading soon afterwards. A plethora of funds have been launched, including ETFs from major players like BlackRock, Fidelity and Invesco.”

“The key point is that these spot Bitcoin ETFs – unlike futures or derivatives-based instruments that existed previously – actually hold the digital currency, so as they gain inflows they must buy more of it and that is likely to increase the underlying price of Bitcoin. Not least because there is a well-documented limited supply, thanks in part to the ‘halving’ process”, he added.

The bitcoin price has climbed since the halving event, echoing previous cycles, and is currently trading at around $66,000. 

However, while bitcoin has increased in value in the leadup to and immediate aftermath of the halving event, some experts believe most of the gains have already been priced in. Analysts at Deutsche Bank said that they did “not expect prices to increase significantly following the halving event”, given that it had been “widely anticipated in advance due to the nature of the Bitcoin algorithm”. 

Others actually expect the Bitcoin price to fall going forward. CoinDesk, a media outlet covering the cryptocurrency industry, reports that analysts from J. P. Morgan have issued a warning to this effect. “The bank sees downside for the world’s largest cryptocurrency after the halving because the market is still in overbought conditions, according to its analysis of open interest in bitcoin futures”, CoinDesk reports.

Before making any decisions, investors should remember that bitcoin is a high risk asset class. It isn’t for beginners, and you should be willing to lose any money that you invest. You should also be wary of crypto scams, which are becoming increasingly common.

If you are still keen to have some exposure to the cryptocurrency and its large swings in value, you could consider a small allocation as part of a diversified portfolio. Traditional investments like equities and bonds should have a larger weighting than high risk alternatives like bitcoin.

The US financial regular has paved the way for the launch of Bitcoin-linked exchange traded funds (ETFs) in a boost for the cryptocurrency market but UK investors will remain blocked from the products.

The Securities and Exchange Commission (SEC) has previously blocked attempts to launch Bitcoin spot ETFS, which track the price of the popular cryptocurrency rather than investing through futures, claiming the asset is open to fraud and manipulation.

US courts have queried its opposition and the SEC yesterday gave the go ahead for 11 ETFs to list from established providers including Blackrock, Fidelity and Grayscale.

Investors in the US will be able to access the ETFs but they are still banned for Brits due to Financial Conduct Authority rules.

The SEC remains cautious though due to the volatility of cryptocurrencies and its chairman Gary Gensler highlighted that the regulator was by no means endorsing Bitcoin.

“While we approved the listing and trading of certain spot bitcoin exchange traded product shares, we did not approve or endorse Bitcoin,” says Gensler.

“Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto.”

What is a Bitcoin ETF?

A Bitcoin ETF lets investors track the price of the cryptocurrency through a regulated investment provider.

This is arguably a safer way to get exposure to Bitcoin compared with holding it on a crypto exchange where there may be high fees and risks of fraud or by investing in risky futures products.

The price of Bitcoin has already hit two-year highs in anticipation of the SEC approval but it doesn’t remove the volatility of cryptocurrencies.

They are still subject to wild price swings depending on sentiment and there are risks of big losses.

Ben Laidler, global markets strategist at eToro, says this could pave the way for ETFs linked to other cryptocurrencies such as Ethereum.

“The long-awaited approval of a US spot Bitcoin ETF is a key step forward in the development of the youngest, smallest, and most retail-investor dominated of asset classes, in the world's biggest capital market,” he says.

“This will also likely be a sign post for other regulators to follow as global investors increasingly turn to US markets to access the new Bitcoin ETF.

 “The first US spot Bitcoin application was made way back in 2013. Whilst the total crypto market capitalisation today is only $1.6 trillion, even after its huge asset-class leading gains of 2023, making it just the same size as Amazon, for example.

“Approval is only the first of a long list of potential catalysts this year. From an Ethereum spot ETF, to Bitcoin's April 'halving', mid-year Fed interest rate cuts, and year-end US accounting and global regulatory changes making it easier for companies and banks to own crypto assets.”

Will Bitcoin ETFs be available in the UK?

The approval won’t help UK investors as the FCA has banned the marketing of crypto ETFs.

That means the main option for UK crypto enthusiasts is purchasing Bitcoin through crypto trading platforms.

Jason Hollands, managing director of Bestinvest, suggests it is unlikely that UK regulators will follow suit with crypto ETFs.

“To be made accessible to UK retail investors, funds – including ETFs – must produce very prescriptive and detailed documents known as Key Information Documents under EU-inherited Packaged Retail and Insurance-based Investment Products Regulation, which US listed ETF funds don’t," he says.

“A further reason why UK platforms are unlikely to offer access to the US listed Bitcoin ETFS is the FCA’s recently introduced Consumer Duty regime, which has raised the bar on regulated UK firms insuring good outcomes for retail investors, which is likely to deter platforms from offering access to products that our own regulator regards as high risk.”

He adds that the money flowing into Bitcoin for ETFs may help the price but it also risks making the value more volatile.

The risks of cryptocurrency investing

Cryptocurrencies are unregulated in the UK.

Trading platforms must get FCA approval for money laundering and are required to ensure users understand the risks of the asset.

But there are few fundamentals underlining the prices beyond supply, demand and market sentiment.

This means the price of Bitcoin and other cryptocurrencies can fluctuate wildly and investors may end up with major losses.

There have also been cases of fraud and hacks of trading platform, resulting in customer money being stolen.

“Bitcoin has endured a number of scandals and huge price volatility, but large investment groups are clearly still interested in packaging it into a tradeable product for punters,” says Laith Khalaf, head of investment analysis at AJ Bell.

“This is presumably because there would be large consumer demand for Bitcoin ETFs, but sometimes you should be careful what you wish for. 

"It’s hard to make a case that crypto fulfils a genuine financial planning need that can’t be met by other assets, but it definitely does open up investors to the possibility of very heavy losses.”

Once you know what you are doing, if you want to buy significant sums of Bitcoin, the place to do that is on an exchange. There are all sorts of identity checks you have to go through to open an account with an exchange. The process can be rather frustrating. If you’re struggling, one point I’d make is that in many cases I found it easier doing this on my phone than on my computer. Even more frustrating is trying to send large sums. Banks sometimes limit the amount you can send. Some exchanges require extra verification, which can take considerable time to process.

Bitcoins might be a digital asset (so you can’t touch them). But they’re also a bearer asset (if you hold them, you own them). So you need to keep them somewhere safe.

Where to store your Bitcoin

You can keep your bitcoins at an exchange – some offer cold storage, which is similar to the way that bullion dealers often offer gold storage. And if you feel you don’t have the time or the ability to learn and apply your own sovereign cold storage systems, then storing your Bitcoins in cold storage, with one of the more reputable exchanges, in one of the more reputable jurisdictions is a solution.

Exchange security is infinitely superior to what it once was. However, just understand that if the exchange goes bust, is hacked or has its assets frozen, you could well have a problem on your hands. The same government protections that exist in traditional finance do not exist in Bitcoin. It is a form of digital cash. Replacement certificates cannot be issued, nor the stolen certificates be cancelled. Once it is gone, it is gone. (And unlike your gold, it is unlikely to be insured). The purists and the old hands all recommend taking custody, and so do I. Be your own sovereign bank, as the saying goes.

The most user-friendly means to store your own Bitcoins I found to be is Casa. Other long-term storage options include Trezor, Ledger, Electrum plus a multisig (multi-signature) hardware wallet. These will all start making sense once you start playing around with the technology.

Cautionary tales

Back in 2014, I had my email hacked. The hacker found an archived wallet in my Gmail account, which he used to steal my Bitcoin. It was a common hack at the time and many of us lost our coins. Today what was stolen amounts to a seven-figure sum. 

So angry/stupid was I afterwards that I did not buy back what was stolen and went on to miss out on huge gains. There are many people like me who suffered a similar, or in some cases much worse fate. Imagine if you were one of the early investors who had his coins at MtGox. Until 2014, MtGox was the world’s biggest crypto exchange, handling over 70% of Bitcoin transactions. Many early investors never took delivery of their coins and instead left them on the exchange.

MtGox got hacked. More than 850,000 coins were stolen. Today that amounts to over $34bn. It’s an extraordinary amount of money – it must be the greatest heist in history. How many early Bitcoin investors missed out on becoming multi-millionaires or even billionaires as a result?

The incident has left many in a state of near-permanent depression. Never again will an opportunity like that to make so much money come along. I know of at least two suicides as a result. All because we were not as savvy as we should have been with the tech, and did not protect our accounts well enough.

Security standards have improved dramatically since then. But the moral of the story is: take the time to familiarise yourself with the tech. Several days, if needs be. Even crypto whizzes are still learning new tricks. It is worth the effort.

Whatever route you go down to buy and store Bitcoin, I would recommend using a password manager. Once you get it set up, you will find it to be a labour-saving device, not just for Bitcoin but across the net. Most importantly, it stops you from using the same generic password across multiple websites, which puts you at risk of hacking, identity theft and all the other types of online nefariousness which go on. Another benefit is that you won’t have to remember some complicated combination of letters, symbols and numbers. The password manager will do it for you. 

The best password managers are NordPass, RoboForm, 1Password, Dashlane and LastPass.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

In September 1992 computer scientist Tim May, whose inventions had once made him a great deal of money at Intel, invited a group of eminent, free-thinking programmers to his house near Silicon Valley in California. They were there to discuss this exciting new development called “the internet”.

They were excited about the possibilities, but they were also concerned. Privacy was their issue. On the internet, banks, credit card companies, merchants, and – most worryingly for May and his friends – the government, would all have access to vast quantities of payment information. How would they use it? They were scared of Big Brother. Their mistrust was born of experience. Their friend, the programmer Phil Zimmerman, was under criminal investigation for a simple piece of privacy software he had developed – PGP (pretty good privacy). US authorities claimed he had violated the Arms Export Control Act.

Their solution was to develop computer code, especially in the field of cryptography, that protected privacy. By the end of the meeting, an anarchist philosophy had been born, that of the “Cypherpunks”. They believed that cryptography could lead to social and political change. They were a committed, disparate and in some cases, extremely able group of computer scientists and coders; their belief system was largely libertarian; and while they understood the potential of the internet, they also saw the possibilities it was opening up for state and corporate invasion of privacy.

Your spending habits say more about you than anything. So the ultimate dream of the movement was a system of anonymous cash, beyond the invasive capabilities of governments or banks. For years these brilliant coders tried to develop a system to digitally replicate the cash transaction. But they had a problem.

Bitcoin mining and the “double spending” problem

If I send you an email or a picture or a video – any type of digital code – you can copy and paste that code and send it to a hundred or a million different people. If you can copy and paste money, it instantly loses its scarcity and value, so it is useless. This problem was known among coders as the problem of “double spending”.

Nobody could find a way around it without using a middleman of some kind to verify and process transactions. But a cash transaction has to be made directly from A to B. There can be no middleman. Try as they might, nobody could come up with a system that worked. By the early 2000s, most had given up even trying. Internet cash was an impossibility.

The genius of Bitcoin that so caught the attention of coders was that it solved this problem. Satoshi Nakamoto's invention was a new system of record-keeping – an enormous automated database, which verifies transactions. A transaction is only complete once it is recorded on that database; once it is recorded, it is final. The database is public for all to see and it is maintained, not by any one individual or corporation, but by computers across the bitcoin network – it is “decentralised”, to use the buzzword.

If I want to, I can set up my computer to run the Bitcoin software and maintain this database. In exchange for doing this, the network will sometimes reward me with bitcoins. This is the process known as “mining” – you're bound to have heard of it. This amazing database, which makes digital cash transactions possible, is known as the “blockchain”. Every ten minutes a new set of transactions is processed and verified – that is to say a new block is mined. Once the verification process is complete, a new block is added to the blockchain. Each block is permanent. Many have tried, but none have succeeded in hacking this immutable database. It is the most secure digital technology ever invented.

But not every computer receives the Bitcoin reward every ten minutes. Only one does. A plethora of computers around the world compete with each other to get the reward. The more powerful the computer, the more likely it is to successfully mine the block, and so the power of the computers mining Bitcoin keeps growing. As a result, Bitcoin gets stronger and stronger. Even though only one computer receives the world, all the competing computers contribute by verifying and processing transactions, making the network stronger.

Whereas once Bitcoins were cheap and easy to mine, now the network has grown extraordinarily powerful, consuming vast amounts of electricity in the process. It is like the concept of Adam Smith’s “invisible hand” – the idea that an individual acting in their own self-interest benefits society as a whole. Each individual miner is acting in their own self-interest. They are putting their computer to work in the hope of receiving a Bitcoin reward. But in doing so bitcoin benefits, because that miner’s computer power helps the network grow and strengthen.

The main takeaway is this: the network is incredibly robust. The blockchain cannot be tampered with. The inflation rate is set in code so that everybody knows exactly how many bitcoins there are.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

The fall of Sam Bankman-Fried “serves as a cautionary tale for all those who believe that they are immune to the laws of financial gravity”, says Maximilian Marenbach on crypto.news. Bankman-Fried has been convicted of fraud by a New York court and faces decades in prison. 

FTX, his cryptocurrency exchange, stole billions of dollars from customers’ deposits and illegally passed the cash to Bankman-Fried’s trading operation, where it was gambled away on high-risk cryptocurrency speculation. The “hubris” and “arrogance” that brought down FTX late last year are all too common across the tech industry.

Bitcoin, the most popular cryptocurrency, has shrugged off the scandal to rally 125% so far this year, although it is still 40% short of its November 2021 peak. Crypto enthusiasts argue that Bankman-Fried was just a bad apple, says Molly White in The New York Times. Nonsense. The lack of controls and market manipulation that once made him a billionaire are rife in the crypto industry.

Take the widespread practice of issuing a digital “token” with no inherent value, “pumping up the price” and then “using that inflated valuation” to borrow real money. Many crypto operations rest on “an imaginary foundation” of such worthless tokens. FTX won’t be the last scandal.

The FTX trial exposed the “credulousness with which millions of crypto believers”, who are generally suspicious of traditional banks and brokerages, instead entrusted their savings to cowboy outfits like FTX, says Bloomberg.

Traditional finance has its problems, but crypto – full of opaque, unregulated operations rife with “conflicts of interest” – is even worse. Most digital assets generate no income and are “fundamentally worthless” beyond their speculative value. Unless, that is, “you’re looking to launder money”.

The most promising use case for crypto might be in the huge video gaming industry, says Jon Sindreu in The Wall Street Journal. Gamers are already “immersed in a digital world” and are certainly willing to pay for “a Darth Vader suit or flashy virtual gun”. But digital bank transactions already fill that demand better than blockchain technology. Attempts to create game-based currencies have quickly succumbed to speculation, with people playing not for fun but to win tokens that can be cashed out.

Cryptocurrencies are “Monopoly money”, says Jemima Kelly in the Financial Times. The industry doesn’t create value – indeed, it arguably destroys it. Yet this “nihilistic” universe – where one user’s gain is another’s loss – only mirrors the worst aspects of the wider finance industry, where much so-called “financial innovation” is also “a game of... finding gaps in existing rules and exploiting them” until regulators catch up.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

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As the “boy wonder of crypto”, Sam Bankman-Fried “got richer faster than almost anyone in history, amassing an estimated $26bn in personal wealth”, appearing on countless magazine covers, and rubbing shoulders with the rich and powerful, says the BBC. 

SBF, as he is known, was never shy about it: he wanted to get rich. “An overachieving child born to two overachieving parents,” SBF studied at MIT and fell under the spell of “effective altruism” – the idea that making as much money as you can, so you can give it away, is the best way to be charitable. At the age of 25, he founded Alameda Research to exploit arbitrage opportunities in cryptocurrencies. In 2019, he founded FTX, an exchange for digital tokens. Within months, the volume of daily trading hit $300m. 

His fall from grace was equally rapid. On 7 November 2022, a rival executive expressed concern about FTX’s finances, sparking a multibillion-dollar bank run. in November 2023, following 15 days of testimony, a jury took only four and a half hours to find him guilty of defrauding his customers and lenders, and of conspiring with others to commit securities fraud, commodities fraud and money laundering, says The Economist. 

Just months into its existence, Alameda was borrowing customers’ deposits for its own purposes. To prove fraud, the prosecution often needed simply to use SBF’s own words against him. At one point his lawyer asked if a document was being offered for its truth. “Your honour, it’s the defendant’s own statements... No, it’s not being offered for its truth,” the prosecutor said. SBF faces further charges in a trial scheduled for March and a maximum sentence of 110 years. 

Still, SBF has provided investors and the financial system with “a valuable service”, says Bloomberg. Millions of “crypto believers” have entrusted their money to unregulated financial intermediaries that “don’t face the same requirements for safety [and] soundness... that banks and stock exchanges do”. Most of the tokens being traded are “fundamentally worthless”. 

FTX’s collapse has brought such truths to light. The hope is that legislators and regulators will now step in. In the meantime, just three letters might serve to warn people away: FTX.

This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.

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As long-time readers will know, I have been encouraging readers to buy Bitcoin since 2013. I continue to do so. Everybody should own some Bitcoin. Its potential is too enormous to ignore, and I feel a percentage of everybody’s portfolio should be allocated to it. If I had a Bitcoin for every person who has come up to me and said how they should have bought it when they first heard me talking about it, but didn’t, I’d be richer than Bitcoin’s founders.

By owning bitcoin you are effectively owning shares in perhaps the most technologically brilliant system of money in history. The technology is already becoming the template for national currencies in the form of central bank digital currencies (CBDCs) but as supranational money for the borderless medium
that is the internet, and with its capacity for micropayments, bitcoin’s potential scalability dwarfs that of national currencies. 

With its finite supply, it has the potential to become a widespread online-savings vehicle for both individuals and corporations. Bitcoin benefits from its incredibly robust blockchain (the digital ledger that underpins the cryptocurrency). It is well-established as the first and foremost cryptocurrency, making it easier to expand its network. Bitcoin’s Lightning Network, a blockchain-based technology, makes Bitcoin transactions incredibly quick. 

Given all this, in a world of artificial intelligence (AI) and automated payments, it has the potential to become the default cash system for the internet, the standard on which internet monies, from the M-Pesa to Air Miles, are based. Why not have a piece of that potential pie?

If I look at the combined average IQ of people in the Bitcoin sector and compare it with, say, gold mining, there is no contest. Bitcoin abounds with brain boxes. By owning Bitcoin, you are effectively leveraging this extraordinarily high combined IQ. 

I don’t think it is going to the moon tomorrow. Bitcoin tends to go through a cycle. The first phase I call “quiet accumulation”, which is followed by “frenzy and a blow-off top”. Thirdly, there is the “monster correction”. Finally, we reach a stage of “frustrating consolidation”. 

We’re somewhere in phase four or one, although such phases can last a long time. But news broke a fortnight ago of what could prove a landmark court ruling for bitcoin. The Financial Times, traditionally sceptical about Bitcoin, called it “a big win”.

Legal imbroglios

The decision concerned the Greyscale Bitcoin Trust which was listed in the US in 2013 and buys and holds Bitcoin. So in buying the trust investors are, in effect, buying Bitcoin, or at least getting exposure to the Bitcoin price. Greyscale now has something like $17bn under management.  

However, investors cannot sell their shares and redeem them for Bitcoin. They can only sell them to someone else. This means in effect that the trust cannot sell its Bitcoin: the amount of Bitcoin in the trust can only increase (as it issues more shares). At first the trust traded at a considerable premium to the Bitcoin price: it was the only way investors could own Bitcoin via a broker. At times Greyscale traded at double the value of its Bitcoin holdings. However, in recent years this reversed, so that by December last year the trust was trading at a 50% discount to the Bitcoin price. What was the point of owning the trust then, if it doesn’t track the Bitcoin price?

Greyscale had a problem. The solution was to convert the trust into an exchange-traded fund, so it would be able to buy and sell Bitcoin according to the market’s demand, thus accurately tracking the price. For years Greyscale has been trying to get permission. But the US financial regulator, the Securities and Exchange Commission (SEC), rejected its application.  

A question of balance

The SEC has repeatedly ruled against other Bitcoin ETF applications too. There have been so many. The Winklevoss brothers tried to get one listed. So did Cathie Wood. They were all rejected. There are at least half a dozen other proposals under consideration from the likes of BlackRock, WisdomTree and Fidelity. But it is clear that the SEC, like the UK’s City regulator, the FCA, does not like crypto. Gary Gensler, chair of the SEC, has issued a plethora of regulatory actions against the likes of Coinbase and Binance. The latter is the largest crypto exchange in the world.

To be balanced, the SEC has approved ETFs based on Bitcoin futures. But it has argued, not so unreasonably given its remit, that bitcoin trades on unregulated exchanges and can be prone to market manipulation.

A fortnight ago, however, a federal appeal court in Washington ruled that the SEC was wrong to reject the Bitcoin ETF application Greyscale brought last year. “The denial of Grayscale’s proposal was arbitrary and capricious because the Commission failed to explain its different treatment of similar products,” said one of the three judges. The Grayscale appeal focused on one simple question: whether it could offer a spot Bitcoin ETF that would expose retail investors to the real-time price of Bitcoin. 

The fact is that there is a lot of demand for a Bitcoin spot ETF, not just in the US but worldwide. We shall see if the SEC now appeals, but the upshot is that a spot bitcoin ETF now looks a lot more likely. An ETF will open up entirely new markets for bitcoin both at the retail and the institutional level. It will bring a lot more money into Bitcoin. With Bitcoin limited supply, that has to be very bullish.

With a Bitcoin ETF in the US, the FCA here in the UK will almost certainly have to reevaluate its anti-crypto stance, which has made it so difficult for UK investors to invest in this sector via traditional brokers. We shall see.

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Cryptocurrency trading firms will be required to give first-time investors a “cooling-off period” as part of a package from the Financial Conduct Authority (FCA) to ensure crypto investors understand the risks.

The new measure will also see “refer friend” bonuses banned from 8 October as part of a broader shake-up of crypto advertising rules.

The FCA says the incoming rules mean crypto firms must ensure people have the appropriate knowledge and experience to invest in crypto assets, while those promoting crypto must also put in place clear risk warnings and ensure adverts are clear, fair and not misleading.

The move has been painted by experts as another attempt by the regulator to curb the crypto space and bring it in line with how it regulates other corners of the financial sector.

Why is the FCA clamping down on crypto?

The FCA regulates the financial sector to ensure it is compliant with UK law and to protect consumers from nefarious activities. Businesses dealing with crypto have to register with the FCA and follow anti-money laundering rules. But there’s no way of protecting investors’ money, as there is with more conventional investments under the Financial Services Compensation Scheme, as much of the crypto market remains unregulated.

The FCA has been steadily trying to exert more influence over the crypto market by targeting crypto advertisements and offering educational resources to potential investors.

“The message to crypto firms is that if they want to play in the mass market, they’re going to have to play by the rules,” says Laith Khalaf, head of investment analysis at AJ Bell.

“This is likely to be the thin end of the wedge for crypto regulation, as financial watchdogs across the globe seek to protect consumers from fraud, sharp sales tactics and misleading information.

This week, crypto exchange Binance was charged with a number of offences by the US regulator, while the crypto world is “still reeling in the wake of the FTX scandal,” Khalad says.

“The crypto market has often been compared to the wild west, but now the sheriffs are riding into town to clean things up,” he adds.

Myron Jobson, senior personal finance analyst at interactive investor, says the FCA’s proposal could aid investors in making informed decisions around risky investments.

“Cryptocurrency markets are a cauldron of volatility, subject to wild swings and abrupt reversals. Investors require a comprehensive understanding of the volatility, technological complexities, and market uncertainties inherent in cryptocurrency bets. Failing to provide accurate and balanced information creates a distorted reality, leading unsuspecting individuals down a dangerous path of financial harm.

“As such, while it is only right that investors have the freedom to speculate, clear risk warnings are essential so that they know what they are getting themselves into,” he adds.

Can cryptomarkets to be regulated?

Calls have been made for the FCA to ramp-up the level of oversight it provides to crypto markets. Last month, the Treasury Committee said cryptocurrency trading should be regulated as a form of gambling after a report claimed cryptocurrencies have “no intrinsic value and serve no useful social purpose”.

It said around 10% of UK adults hold or have held crypto assets, which the Committee argued poses a “significant risk to consumers” due to their volatility.

“The events of 2022 have highlighted the risks posed to consumers by the crypto asset industry, large parts of which remain a wild west,” said Harriett Baldwin MP, chair of the Treasury Committee.

The committee called on the government to treat cryptocurrency trading as gambling due to its high risk nature.

It said that while it supported financial innovation that had potential benefits, these remained unclear when it came to cryptocurrency, while the risks posed to consumers, as well as the environment, were already “real and present”.