Key Takeaways
- Stratiphy is offering crypto ETNs within an IFISA, creating a limited path back to tax-efficient crypto investing.
- By restricting crypto ETNs to niche IFISAs, UK authorities have made access to crypto ISAs more complex.
- Strong demand for tax-efficient crypto investing, often referred to as crypto ISAs, persists despite barriers.
A UK startup is seeking to reopen a tax-efficient route into crypto assets for retail investors — effectively restoring a crypto ISA pathway — after a recent rule change effectively shut them out of the country’s most popular savings accounts.
Stratiphy said on Wednesday it would allow clients to hold crypto-linked exchange-traded notes (ETNs) within an Innovative Finance ISA (IFISA), offering a potential workaround after tax authorities barred such products from mainstream stocks-and-shares ISAs.
The move follows a decision by HM Revenue & Customs (HMRC) to restrict crypto ETNs to IFISAs from the start of the current tax year, removing their eligibility for standard ISA accounts used by millions of Britons.
Startup Offers New Crypto ISA Route
Stratiphy, launched last August, will initially provide three exchange-traded notes from issuer 21Shares, tracking Bitcoin, Ethereum and a hybrid Bitcoin-gold product.
The platform said its structure would allow investors to shield potential gains from capital gains tax, a key attraction given the volatility of digital assets.
“We’re excited to be at the forefront of this important evolution in the UK investment landscape,” Chief Executive Daniel Gold told the Financial Times, adding that investors needed “a simple and compliant pathway to maintain exposure to digital assets.”
Gold had previously signaled the company’s ambitions to expand crypto access within tax-efficient wrappers.
“We expect strong investor appetite as the UK catches up with other European markets,” he told CCN in October, adding that regulatory changes would “empower investors to seek new and diverse opportunities.”
No platform had previously combined crypto ETNs with an Innovative Finance ISA, leaving investors with limited options for holding such assets in tax-advantaged accounts, according to industry reports.
Crypto ISA Rule Change
Britain’s Financial Conduct Authority lifted a ban on retail investors buying crypto ETNs in October last year, allowing trading in instruments linked to major tokens such as Bitcoin and ether.
However, HMRC’s subsequent decision to exclude these products from stocks-and-shares ISAs has limited their practical appeal, as investors can no longer benefit from the tax-free treatment those accounts provide.
ISAs allow individuals to invest up to 20,000 pounds per year without paying income or capital gains tax on returns.
By contrast, IFISAs are niche products typically used for peer-to-peer lending and are not widely offered by mainstream platforms.
Impact on Investments
The loss of ISA eligibility could reduce the tax efficiency of crypto investments for UK retail investors, some analysts say.
Michele Tieghi, a finance expert, said the impact could be significant, particularly for higher returns.
He gave a hypothetical example of a £20,000 investment rising to £60,000, generating a £40,000 gain if held within an ISA.
Outside a tax-advantaged account, most of that gain would be subject to capital gains tax after the £3,000 annual allowance, she said.
“At a 24% capital gains tax rate, investors would lose £8,880 compared with holding the investment in an ISA,” Tieghi said.
He added that removing tax-free treatment could prompt some investors to shift to assets that remain eligible for ISAs, such as equities or exchange-traded funds.
However, he warned that the changes may also have unintended consequences.
“It won’t stop people from investing in cryptocurrency,” he said.
“Instead, it may push some investors toward unregulated or offshore platforms with fewer restrictions, potentially increasing risk.”
Tax Scrutiny Intensifies
The ISA rule change comes as British authorities tighten oversight of crypto investing more broadly.
From January, new reporting requirements aligned with the OECD’s Crypto-Asset Reporting Framework will require UK-based exchanges and wallet providers to collect and share detailed user data with HMRC.
Profits from crypto investments above the £3000 annual allowance are already subject to capital gains tax, and officials have increased efforts to ensure compliance as digital asset use grows.
Investor Interest Strong
Despite regulatory uncertainty, surveys suggest significant latent demand for crypto exposure among UK investors.
An IG survey cited by CCN in October found that 30% of UK adults would consider investing in crypto ETNs, rising to 50% among those aged 18 to 24.
That compares with around 12% of the population who currently hold crypto, according to a 2024 Financial Conduct Authority survey.
The gap indicates that some investors may prefer exchange-traded structures over direct ownership of digital tokens.
Among respondents interested in crypto ETNs, nearly one in five cited the ability to hold them within tax-efficient accounts as a key factor, the IG survey showed.
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Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
