The Financial Conduct Authority (FCA) has proposed lifting its ban on crypto-backed ETNs for UK retail investors. If approved, this could open the door to gaining Bitcoin exposure within a SIPP, which would represent a meaningful shift for UK crypto investors by bringing potential tax and administrative advantages.
Below we set out the current rules around crypto and SIPPs, and how the position could change if the proposal is approved.
Contents
- 1. What the FCA Is Proposing
- 2. What’s an ETN and Why Does It Matter?
- 3. The Current Rules for SIPPs and Crypto
- 4. How the Tax Position Could Change
- 5. Risks and Practical Limits
- Our View
- FAQs
1. What the FCA Is Proposing
In June 2025, the UK’s Financial Conduct Authority opened a consultation on allowing crypto-backed exchange-traded notes (ETNs) to be sold to retail investors. These products, which track the price of Bitcoin or other cryptoassets, have so far been off-limits due to the FCA’s 2021 ban on crypto derivatives and ETPs for retail use.
If the proposal goes ahead, retail investors would, for the first time, be able to access FCA-regulated crypto ETNs listed on recognised UK exchanges such as the London Stock Exchange.
2. What’s an ETN and Why Does It Matter?
An ETN (Exchange-Traded Note) is a type of unsecured debt security issued by a financial institution. It tracks the performance of an underlying asset, such as Bitcoin, but without holding that asset directly.
| Feature | ETN |
|---|---|
| Structure | Unsecured note issued by a bank |
| Asset Exposure | Tracks performance (e.g. of Bitcoin), but does not hold the asset |
| Trading | Listed on stock exchanges; trades like shares |
| Risks | Asset volatility and issuer default risk |
In the UK, ETFs cannot include crypto, but ETNs can. That makes them the likely route for Bitcoin exposure in SIPPs.
3. The Current Rules for SIPPs and Crypto
Under current FCA policy, UK retail investors cannot access crypto-backed ETNs. Some SIPP providers have historically offered indirect or offshore crypto access, but FCA approval would make regulated, exchange-listed products possible for the first time.
Investors wanting indirect exposure have had to rely on:
- Shares in crypto-related companies such as MicroStrategy or Coinbase
- Blockchain-themed ETFs that invest in supporting infrastructure, not the crypto itself
In practice, this has meant that investors looking for pension exposure to crypto have had to use indirect routes that do not closely track the underlying asset.
4. How the Tax Position Could Change
If the FCA’s proposal is approved and SIPP providers choose to support crypto ETNs, investors could gain access to a tax-deferred pension route for Bitcoin exposure.
| Scenario | Tax Treatment |
|---|---|
| Holding Bitcoin directly | Capital Gains Tax on disposals; Income Tax on crypto income such as staking |
| Holding a BTC ETN outside a wrapper | Capital Gains Tax on sale; Income Tax on distributions (if any) |
| Holding a BTC ETN in a SIPP | Tax-deferred growth; 25% tax-free lump sum; remaining income taxed on withdrawal |
Annual Limits and Contributions
| Wrapper | Contribution Limit (2025/26) | Notes |
|---|---|---|
| SIPP | Up to £60,000 or 100% of earnings (whichever is lower) | Personal contributions receive income tax relief; growth is tax-deferred |
Allowing crypto ETNs into SIPPs could enable investors to benefit from long-term Bitcoin price growth without the usual CGT and reporting burdens. In practice, this would simplify the tax position significantly for those with long-term exposure.
5. Risks and Practical Limits
While the tax and simplicity benefits are attractive, investors should still consider:
- Issuer default risk: ETNs are debt instruments. If the issuing bank collapses, the note may become worthless.
- Eligibility: Only FCA-approved ETNs listed on a recognised UK exchange are likely to qualify.
- Ownership: You do not control or own the underlying asset. There is no private key, wallet, or on-chain utility.
- Time horizon: SIPPs are pension products and therefore designed for long-term investments. Investors would not be able to access the funds until they reach the minimum pension age (currently 55 but rising to 57 in April 2028).
An ETN is a financial product designed for exposure, not ownership or utility.
Our View
We see this as a significant potential shift in the UK tax landscape for crypto investors and a meaningful step towards further aligning crypto with traditional investment structures.
If approved, it would allow UK investors to hold Bitcoin-linked products within mainstream tax shelters, something that has not been possible until now.
But what we would really like to see is crypto ETFs becoming eligible for ISAs. That would represent not just a tax saving, but a huge administrative relief for UK crypto investors. Many are still grappling with tracking disposals, pooling costs, and calculating gains across multiple platforms, and ISA eligibility would remove that burden for a swathe of UK investors. This is something we see regularly, particularly where investors have built up positions over time.
Making crypto ETFs ISA-eligible would also go much further toward aligning crypto with traditional investment structures. It would acknowledge that crypto is increasingly viewed as a legitimate part of a diversified portfolio and deserves the same level of clarity and tax efficiency as mainstream assets.
We will be watching the outcome of the consultation closely and will provide further updates as the position develops.
FAQs
Most SIPP providers do not currently offer access to crypto-backed ETNs, and UK retail investors remain restricted from buying these products. That could change if the FCA’s current consultation is approved.
The FCA is considering lifting the ban on crypto-backed exchange-traded notes (ETNs) for retail investors. This would allow regulated Bitcoin ETNs to be listed on UK exchanges, which could open the door to inclusion in SIPPs, depending on provider support.
Growth within a SIPP is tax-deferred. Contributions typically receive income tax relief, up to 25% of the pension can be withdrawn tax-free, and the remainder is taxed as income when drawn. If available, this could provide a more efficient structure for long-term Bitcoin exposure.
Yes. You can contribute up to £60,000 per year, or 100% of your earnings, whichever is lower. Personal contributions usually qualify for income tax relief.
No. A Bitcoin ETN provides exposure to the price of Bitcoin, but you do not own the underlying asset. There is no private key or wallet involved, as it is a financial product that tracks performance.
The FCA consultation was launched in June 2025. If approved, regulated crypto ETNs could become available to retail investors within the following year. We will provide updates as the position develops.
