MILLIONS of Brits are being offered the chance to buy Bitcoin and Ethereum through the country’s biggest investment platform.
Hargreaves Lansdown has started letting its two million customers invest in crypto for the very first time, but should you do it?
The platform’s announcement comes nearly a year after the City watchdog lifted its ban on everyday investors buying crypto-linked products.
But instead of buying actual Bitcoin or Ethereum, customers are buying something called a crypto ETN.
This is because Hargreaves Lansdown operates as an investment platform rather than a dedicated cryptocurrency exchange.
So they can’t let customers hold digital coins directly, but under regulatory frameworks, they offer exposure through these regulated, stock-market-listed instruments.
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This is basically a note that trades on the stock market and copies the price of a cryptocurrency, without you ever having to touch the coins yourself.
Crucially, an ETN isn’t quite the same as an ETF, which most investors are more familiar with.
An ETF usually owns the actual asset it tracks, but an ETN is technically a form of debt issued by a bank or financial firm, which promises to mirror the crypto price minus fees.
That matters because it means you’re not just betting on Bitcoin or Ethereum, you’re also trusting that the company behind the note stays in business.
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If the issuer collapses, you could lose your money even if the price of the crypto itself hasn’t moved.
These crypto ETNs are issued by established financial institutions and specialist investment firms, with the range of providers on the platform including well-known names such as iShares, WisdomTree, 21Shares, Invesco, CoinShares, and Bitwise.
On the plus side, buying a crypto ETN means no wallets, no passwords to lose, and no signing up to a crypto exchange.
How do these investments work?
ETNs can be bought and sold just like normal shares during stock market hours, and you can hold them in a Fund and Share Account or a pension.
However, they can’t go in a Stocks and Shares ISA though, so remember that you may have to pay tax on the money you make.
And they’re not protected by the Financial Services Compensation Scheme, so if the company behind the note goes bust, your cash could disappear.
This lack of protection is standard across the board, as the financial safety net does not cover any cryptoassets or crypto-linked products, leaving investors fully exposed if the market or a provider collapses.
But they’re not for everyone.
If you want to buy one via Hargreaves Lansdown, you have to prove you’re an experienced investor and pass an online test.
Then there’s a mandatory 24-hour cooling-off period, forced by the regulator, before you’re allowed to make your first trade to make sure you understand the product you’re buying.
Make sure you have read up on what you’re buying before you make any time of investment and that you know the risks involved.
Is Hargreaves a good place to buy crypto?
While Hargreaves is now offering crypto-linked assets, that doesn’t mean it’s the best place to buy them.
Once you’re in, the platform charges 0.35% a year to hold the crypto notes, capped at £12.50 a month.
The crypto companies themselves also take a cut, charging their own fees of up to 0.35% a year.
That means on a holding of £10,000, you could end up paying up to £70 a year in combined platform and issuer fees.
But Hargreaves Lansdown isn’t the only game in town, and if you want to buy crypto shopping around could save you cash.
Moneyfarm charges a flat £3.95 per trade, while Trading 212 lets customers trade for free on some crypto products.
Saxo Markets and Freetrade also offer crypto notes through ordinary investment accounts and pensions, with their own pricing depending on the plan.
So if you trade often, Hargreaves Lansdown’s fees could end up pricier than some rivals.
Make sure you’re fully up to date with the fees when you’re trading crypo or other investments so you don’t overpay.
Is buying crypto through your investment platform a good idea?
Isabella Galliers-Pratt, Senior Investment Director at Rathbones, isn’t convinced it should be a big part of anyone’s savings.
She said: “Crypto ETNs are a useful reminder that being well known doesn’t necessarily make something a good investment.”
She added: “There’s no shortage of buzz around crypto, and it’s easy to see the appeal. It’s a familiar name, heavily discussed and often associated with the prospect of spectacular returns.
“But popularity and investment merit are two very different things.”
She warned that a lot of the hype around crypto is just noise.
She said: “Much of the attraction can amount to little more than market sentiment and ‘vibes’ – enthusiasm that can be powerful, but doesn’t necessarily translate into sustainable returns or sensible risk-adjusted outcomes.”
Unlike traditional investments such as shares or corporate bonds, cryptocurrencies do not generate any underlying profits, pay dividends, or have physical assets backing them up.
Their price is driven almost entirely by supply, demand, and market speculation rather than any intrinsic financial value.
She added: “Crypto ETNs are high-risk, speculative investments.
“Their value can be extremely volatile, and investors can lose a substantial amount of money.
“For most people, that makes them difficult to justify as a core holding in a diversified portfolio.”
Still, she admitted there could be a small place for crypto in some people’s portfolios.
She said: “That doesn’t mean there is no place for them at all. But if someone chooses to invest, it is worth viewing crypto as a speculative satellite investment rather than the foundation of their financial plan.”
She added: “The fact that everyone has heard of an investment is not, by itself, an investment case.”
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Anyone tempted to jump in should remember prices can rocket or crash within days, and there’s a genuine risk of losing every penny, especially given the extra layer of issuer risk that comes with an ETN.
Most experts agree crypto should only ever be a tiny slice of a much bigger, safer pot of savings and investments, sitting alongside things like shares, bonds and cash rather than replacing them.
What is cryptocurrency?
CRYPTOCURRENCY is a type of digital money that only exists online, with no physical coins or notes.
The most famous one is Bitcoin, which was launched back in 2009 and is still the biggest crypto in the world today.
Unlike pounds or dollars, crypto isn’t controlled by a bank or the government, and it runs on technology called the blockchain, which is basically a giant online ledger that records every transaction.
Other popular cryptocurrencies include Ethereum, which is often used to power other apps and digital projects, as well as smaller coins sometimes dubbed “altcoins”.
Fans of crypto say it offers freedom from traditional banks and the chance of big returns, with some early Bitcoin investors making fortunes.
But it’s also incredibly risky, and prices can swing wildly within hours, sometimes losing huge chunks of their value overnight.
Bitcoin has crashed by more than 50% in the past before bouncing back, and there’s no guarantee it will always recover.
Crypto isn’t protected by the Financial Services Compensation Scheme, so if something goes wrong, you won’t get your money back like you would with a bank account.
The market can also be targeted by scammers and hackers, and prices are often driven by hype on social media rather than any real business performance.
Experts widely agree that crypto should only ever be a small part of someone’s savings, never money you can’t afford to lose.
Anyone thinking about investing should do their own research, understand the risks fully, and consider getting proper financial advice first.