How do crypto ETNs work, and should you invest?
Financial Interest was founded by Damien Talks Money (413,000 YouTube subscribers) to teach the personal finance lessons he wished he'd been taught at school.
Last updated 12th August 2026
14 min read
We've all got that one mate who almost bought a whole bitcoin for 20p back in 2010 and has spent every year since lamenting the fortune that should've been theirs.
And if you've ever fancied investing yourself, but don't particularly like the idea of becoming your own cyber-security department, crypto ETNs might be right up your street. That is, as long as you're happy to stomach a wilder ride than a waltzer with a stuck accelerator pedal.
You can buy in through an investment platform, the asset is held on your behalf, and you get to profit (or not) based on its performance.
But how exactly do crypto ETNs work, what are the risks, and where can you actually buy them? We'll explain all.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
What are crypto ETNs?
You're probably already familiar with cryptocurrency, which is a type of digital currency without a bank or government middleman, recorded on a blockchain and maintained by a global network of computers.
Before crypto ETNs, investors who wanted exposure to crypto had to buy the assets directly through an exchange. This comes with a lot of hassle, including managing digital wallets and private keys, and figuring out a secure storage solution.
Oh, and worrying about the exchange itself going bust, or scammers trying to empty your digital wallet.
Crypto ETNs, or exchange-traded notes, on the other hand, allow you to gain exposure to the performance of crypto without ever actually owning the assets yourself.
This means that, unlike regular ETFs, ETNs are actually a debt instrument – you're purchasing a promise from the issuer to pay you a return based on how the underlying crypto performs.
But strict rules laid out by the FCA and London Stock Exchange state that, in order for a crypto ETN to be made available to UK investors, it must be 100% physically backed.
So for every note purchased by an investor, there's real crypto sitting behind it, held by a regulated custodian – a specialist firm whose entire job is safely storing digital assets.
At least 90% of this crypto must also be kept in "cold storage", meaning the private keys that grant access to them are kept entirely offline. The digital equivalent of an underground bunker.
As of 2026, crypto ETNs are available tracking only two currencies:
- Bitcoin (BTC). The original cryptocurrency, first created in 2009, and still the largest by value. The maximum supply of bitcoin is limited to 21 million bitcoin, which is part of the reason it’s often nicknamed "digital gold"
- Ethereum (ETH). The second largest cryptocurrency by market value, launched in 2015. Unlike bitcoin, ethereum is also a platform that allows developers to build applications using blockchain technology. If you want to be a stickler about it, ether is actually the currency itself, while Ethereum is the name of the network it runs on.
Why crypto ETNs, and not ETFs?
The crypto enthusiasts among you may be aware that similar assets are available to US investors, but marketed as crypto ETFs.
So do transatlantic traders have something we don't?
Yes and no.
It's mainly down to UCITS rules – the framework that investment funds have to follow in order to be sold to retail investors across European markets. Under these regulations, no single holding can exceed 10% of an ETF's value. So crypto assets, which are 100% bitcoin or ethereum, don't legally qualify. The same principle applies to assets tracking the spot price of commodities like gold or silver, which instead have to be labelled ETCs.
ETN is just the broad category that crypto assets most comfortably fall into – though you'll also sometimes see them labelled "ETPs", because this is the umbrella term for all exchange-traded products.
That said, US investors are allowed to trade leveraged crypto ETFs – which can double or triple a return with the use of derivatives like futures contracts behind the scenes – whereas that's not allowed here in the UK, as leveraged funds are not physically backed.
How do crypto ETNs track the price of crypto?
You'll remember we mentioned that ETNs promise to provide a return based on the performance of an asset. Traditionally, this is achieved simply by tracking an underlying index.
But crypto ETNs are a little different to other ETNs.
They still use an index to track performance – specialist providers collect live pricing data from multiple crypto exchanges and combine it into a single reference price, giving a consistent measure of what the cryptocurrency is worth at any given moment.
But because real crypto actually exists backing the ETN, there's another mechanism at play, too. Just like regular ETFs, crypto ETNs use a somewhat biblical-sounding process called creation and redemption to keep their price closely matched to the value of the asset behind them.
This works through a small group of financial institutions called Authorised Participants, who can hand over real crypto in exchange for brand new ETN shares – known as "creation" – or hand ETN shares back in exchange for the crypto itself – known as "redemption."
If the ETN ever starts trading for more than the crypto backing it is actually worth, an AP can create new shares cheaply and sell them on the open market for a quick profit – and that extra supply pushes the price back down.
If the ETN drops below the value of its backing, APs can buy up the cheap shares and redeem them for the more valuable crypto instead, pushing the price back up.
All of which helps keep the price in line with market value.
What are the rules about investing in crypto ETNs in the UK?
The TL;DR answer is that they’re allowed inside General Investment Accounts, SIPPs, and Innovative Finance ISAs.
The more complicated answer is that the government and the FCA have been a tad indecisive when it comes to allowing UK retail investors access to crypto assets.
All crypto ETNs were banned by the FCA back in 2021, citing investors' poor understanding of the crypto market as a whole, the harm caused by "sudden and unexpected losses", as well as concerns over financial crimes like cyber theft.
But that was reversed in October 2025, allowing them to be held inside stocks & shares ISAs and SIPPs. The option to hold them inside stocks & shares ISA, however, was only a "transitional" arrangement allowed until 6th April 2026.
After that, crypto ETNs were reclassified, so they only qualified for inclusion within innovative finance ISAs – a tax wrapper reserved for more complex and risky types of investment with no FSCS protection, like peer-to-peer lending.
And if you've never heard of an innovative finance ISA, you're not alone – only 13,000 people in the UK actually use one, at the last count.
This means there simply aren't many brokers that offer them. And given that crypto ETNs themselves still aren’t commonplace, there's actually only one provider that offers both.
More confusingly still, the rules still allow crypto ETNs inside SIPPs, or self-invested personal pensions, though only a handful of providers currently allow access to them.
Instead, you'll more commonly find them inside taxable General Investment Accounts, which means that HMRC takes a slice of any gains exceeding your £3,000 annual allowance when you sell. Because yes, although the government won't properly regulate crypto, they'll still happily take a cut of your profits.
But strict rules are in place for providers that do choose to offer crypto ETNs. Customers must pass a test proving they understand how these investments work, confirm that high-risk assets won’t make up more than 10% of their total portfolio unless they're a high-net-worth investor, and, in some cases, sign and submit a form confirming they understand all of the risks.
However, the situation is still under review, and HMRC has said that it might consider allowing crypto ETNs to be made available within stocks & shares ISAs at some point in the future, as "consumer understanding deepens".
Which seems pretty mad, when you consider that the current rules would allow you to hold 100% of your ISA portfolio in a single 3x leveraged share, if you wanted to.
Just to be clear, this would also be a bad idea. But it is a bizarre contradiction.
The risks and drawbacks of crypto ETNs
There's no denying crypto investing comes with the possibility of making huge profits – bitcoin had a return of 122% in 2024. But that upside comes with some serious trade-offs.
Concentration
As we've already covered, crypto ETNs have to be all-in on either bitcoin or ethereum. There's no way to access a basket of currencies in one fund, or to combine access to crypto with anything else in a single investment. Naturally, that means there's also nothing to soften the blow if things go south.
Volatility
And go south they probably will.
Since 2009, bitcoin has crashed more than 50% six times, and fell by 70% between November 2021 and June 2022 – the kind of ride that would leave even the most iron-stomached investors feeling travel sick.
It tends to take a while to regain its value, too. Every crash so far has left investors waiting at least a year – and in some cases much longer – to see a new all-time high.
And ethereum can be even more volatile. The currency plunged 94% in 2018, taking three full years to recover, before going on an unprecedented rally, then dropping 80% again between 2021-2022.
In short, while a diversified ETF is typically a gentle carousel, a crypto ETN is a near-guaranteed white-knuckle rollercoaster.
Part of the reason for this is that many crypto traders use borrowed money (or leverage) to magnify their positions. When prices dip, it can trigger what's known as a "liquidation cascade", as automated sell-offs kick in one after another, each one pushing the price down further.
No FSCS protection
With most investments, if either the fund provider or your investment platform goes bust, in the worst-case scenario, the FSCS can compensate you up to £85,000.
But the FCA classifies crypto ETNs as high-risk, "restricted mass-market investments", which puts them outside of its regulatory scope.
The investment platform you're trading with still has the same regulatory requirements – your assets must be ring-fenced from their own, so they can't be treated as part of company debt in the case of insolvency.
But the real risk isn't from your investing platform, it's from the actual issuer of the ETN – for example, WisdomTree or Bitwise. That's because ETNs are debt securities, which makes you a creditor of the issuer, not a holder of the assets. This puts your investment at risk if the issuer defaults or becomes insolvent.
There are safeguards in place intended to prevent this from happening, though. Issuers use something called "Special Purpose Vehicles" for storing crypto – a ring-fenced pool safeguarded by a trustee that keeps assets separate from the issuer, ensuring investors can be refunded in the event of insolvency.
But this system isn't fool-proof. If the issuer fails and then there's a sharp market downturn, the value of the underlying assets could fall before investors are able to access them.
You can't always sell when you want to
Actual crypto trades 24 hours a day, seven days a week. But crypto ETNs traded on the London Stock Exchange can only be bought and sold during market hours – not on the weekends, and not after 4.30pm.
This means that if crypto has a bad weekend, you can't simply hit the sell button and get out. Instead, you'd be forced to watch the grim death-slide to the bottom until the LSE opens again on Monday morning.
No dividends
Unlike shares in a company, crypto isn't an income-producing asset – its value is only derived from how much people are willing to pay for it at any given time. This means you won't get any dividends, which are a kind of payout investors in shares and ETFs often get in return for their investment.
Some ethereum ETNs do allow you to get something called "staking rewards" instead. This type of crypto runs on a system that needs people to "stake" their ethereum – essentially locking it up to help verify transactions and keep the network secure – and in return, the network pays out rewards in the form of more ethereum.
But the payouts tend to be infrequent, and you normally have to invest quite a lot in order to qualify.
The cryptoasset market itself is largely unregulated
Stringent protections exist in most of the saving and investing world to safeguard customers against fraud, market manipulation and losses caused by the failure of baking and investment platforms.
That's not the case in the crypto world, leaving exchanges vulnerable to all kinds of mishaps, including:
- Wash trading, where a trader buys and sells the same asset back and forth between their own accounts to fake genuine demand
- Exchange collapses, where customer funds are misused, mismanaged, or simply vanish – as happened when the FTX exchange collapsed in 2022, wiping out billions of dollars of customer money virtually overnight.
Although crypto ETNs will source currency from a variety of exchanges and never just one, a big collapse could still spell trouble for the issuer. And you're inevitably exposed to the wider chaos of a market where manipulation is rampant.
What crypto ETNs are available to UK investors?
If you do want to invest, you'll find a dozen or so options available to UK investors and priced in GBP. Some of the most popular are listed below.
In general, bitcoin ETNs tend to come with a slightly lower fee, as higher demand has made this market more competitive.
| ETN | Ticker | What it does | TER (fee) |
|---|---|---|---|
| WisdomTree Physical Bitcoin | WXBT | Tracks the price of Bitcoin | 0.15% |
| Invesco Physical Bitcoin | BTIP | Tracks the price of Bitcoin | 0.10% |
| iShares Bitcoin | IB1T | Tracks the price of Bitcoin | 0.15% |
| WisdomTree Physical Ethereum | ETHW | Tracks the price of Ethereum | 0.35% |
| Bitwise Physical Ethereum | BETI | Tracks the price of Ethereum | 1.49% |
| 21Shares Ethereum Core Staking | ETHC | Tracks the price of Ethereum and offers a 1.67% staking yield to investors who meet certain criteria | 0.10% |
Which investing platforms offer crypto ETNs?
You'll find them across a range of investment platforms, though the account type you're able to trade them within differs across providers. It's also changing all the time – some providers (like Freetrade and Trading 212) don't allow crypto ETN trading in their SIPPs right now, but they may do in the future.
| Platform | GIA | SIPP | Innovative Finance ISA |
|---|---|---|---|
| Trading 212 | ✅ | ❌ | n/a |
| Freetrade | ✅ | ❌ | n/a |
| Lightyear | ✅ | n/a | n/a |
| AJ Bell | ✅ | ✅ | n/a |
| Hargreaves Lansdown | ✅ | ✅ | n/a |
| Interactive Investor | ✅ | ✅ | n/a |
| Stratiphy | n/a | n/a | ✅ |
So, are crypto ETNs a good idea?
Hopefully by now, it should be clear that you shouldn't invest in crypto ETNs unless you're prepared for the very real possibility that you could lose most – or all – of your money.
In our optimal order for investing, crypto would sit firmly under step 12, "rolling the dice" – a speculative asset to consider only after you've done all the sensible stuff first, like optimised your pension contributions, paid off high-interest debt, and sorted an emergency fund.
But still, alternative assets in a portfolio can sometimes make useful diversifiers if they tend to rise and fall for different reasons than shares do.
So does that apply to crypto?
The short answer is: not really.
The performance of bitcoin in particular has become increasingly correlated with the stock market, to the point where in many cases, it behaves almost identically. Both equities and crypto tend to dip when interest rates rise, and institutional investors – like large funds and asset managers – will sell both when they want to slash risk. This means that by holding crypto and stocks, your risks and rewards are often magnified, rather than reduced.
On the other hand, some investors value crypto as a scarce, non-sovereign, decentralised asset that could provide a safe haven in times of geopolitical turmoil. The financial equivalent of keeping a crossbow and tins of soup handy for the zombie apocalypse.
If you are going to board the rollercoaster, just make sure it's one you can afford to fall off.
Financial Interest provides guidance, not advice. If you’re unsure about anything, speak with a qualified adviser. When investing, your capital is always at risk. Past performance does not guarantee future results.
