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.
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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.
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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.
