Hargreaves Lansdown, the UK’s largest retail investment platform, began offering Bitcoin and Ether exchange-traded notes to eligible UK retail investors on September 3. The launch gives clients a new way to follow crypto prices without managing a wallet or private keys.
What Hargreaves Lansdown added
Hargreaves Lansdown listed nine bitcoin and ether notes, becoming the last major UK retail investment platform to introduce the products. Other providers had already acted after regulators reopened the market. Issuers include BlackRock’s iShares, WisdomTree, 21Shares, Invesco, CoinShares and Bitwise.
Hargreaves Lansdown crypto ETNs are available through its Fund and Share Account and Self-Invested Personal Pension, known as a SIPP. Clients cannot hold them in a Stocks and Shares ISA.
The platform serves about 2 million clients. Eligibility and knowledge checks determine which of them can actually trade the notes.
>>> Read more: UK Regulator Approves Crypto-backed ETNs for Professionals
How a crypto ETN works
An exchange-traded note is a financial instrument issued by a company and listed on a stock exchange. Its price follows a specified asset or index.
For these products, the issuer uses investors’ money to acquire cryptocurrency through a regulated custodian. The note then tracks the market value of that cryptocurrency after fees.
An ETN is a debt obligation of the issuer, not a fund holding the cryptocurrency in trust for investors. If the issuer becomes insolvent, noteholders rank as unsecured creditors, unlike a fund structure such as an ETF, where the underlying assets are typically ring-fenced from the provider’s own finances. Like other ETNs, crypto ETNs are not deposits, and the Financial Services Compensation Scheme does not protect them. Investors could also lose money simply if cryptocurrency prices fall.
Investors buy and sell the note through their investment account during London Stock Exchange market hours. This makes the product familiar to share investors, but it removes the round-the-clock trading available on crypto markets.
Access comes with several safeguards
The FCA classifies crypto ETNs as Restricted Mass Market Investments, a high-risk category. Hargreaves requires clients to fit an eligible investor category and complete a test covering their knowledge and experience.
Next, a 24-hour cooling-off period applies before a client can view the available notes. The process is designed to limit immediate purchases of a product that can move sharply in value.
Costs extend beyond an issuer’s management fee. Hargreaves charges 0.35% a year for holding the notes, capped at £12.50 per month. Online dealing charges range from £3.95 to £6.95 per trade, depending on activity. The notes themselves carry annual product fees ranging from zero to 0.35% which is due in addition to the platform and dealing costs.
>>> Read more: ING Brings Crypto ETP Access to Retail Investors in Germany
A mainstream platform falls in line
Hargreaves Lansdown was the last of the UK’s large investment platforms to hold out against crypto ETNs. Its decision to launch means retail access through a familiar, regulated account is now the norm across the country’s major platforms rather than the exception.
