UK Retail Investors Question FCA Decision to Allow Crypto in ISAs - Is This a Financial Breakthrough or Regulatory Gamble?
UK retail investors are pushing back against the Financial Conduct Authority's landmark decision to greenlight cryptocurrency holdings within Individual Savings Accounts (ISAs). The move—touted as a major step toward mainstream digital asset adoption—has sparked a fierce debate about risk, regulation, and the future of personal finance.
Why the Skepticism?
Critics argue that introducing volatile crypto assets into tax-advantaged savings wrappers designed for long-term stability is a regulatory mismatch. They point to crypto's notorious price swings and question whether ISAs should shelter speculative investments alongside traditional stocks and bonds. "It feels like putting a rocket engine in a family sedan," remarked one portfolio manager—who, for the record, still charges 2% for underperforming the index.
The Compliance Tightrope
Providers now face the daunting task of integrating crypto custody, valuation, and reporting into existing ISA frameworks. The FCA insists robust safeguards will accompany the rollout, but skeptics wonder if oversight can keep pace with an asset class that operates 24/7 across borderless networks. Will KYC checks and anti-money laundering protocols hold up when wallets move billions in seconds?
A New Era or a False Dawn?
Proponents hail the change as a necessary evolution, arguing that digital assets represent the future of value storage and transfer. They see ISA inclusion as a critical step toward legitimizing crypto for everyday savers. Yet, with memories of crypto winters still fresh, many investors remain wary—wondering if this is visionary policy or just regulators chasing financial trends they barely understand. After all, this is the same system that once labeled mortgages 'safe' right before 2008.
The verdict? The FCA has opened a door. Whether UK investors walk through it—or slam it shut—will define the next chapter of crypto's rocky relationship with traditional finance.
Demand grows as investors seek simpler access
The FCA estimates that about 5 million people hold crypto in the UK, down from 7 million in 2024. For them, Isa access matters. Gains inside an Isa are exempt from income tax and capital gains tax. When readers were asked if they would use the new option, many said yes.
Anthony Merlo said he wanted to use it but could not. He had already filled his £20,000 ISA allowance. “I was excited, but pretty soon realised I couldn’t take advantage of it. It was a little frustrating,” he said. To use future allowances, he would need an Innovative Finance Isa, which few providers offer.
Matthew Tagliani from Invesco said demand was not only about tax. He said the process had been a barrier. “Previously, if you wanted to buy crypto, you had to do so through a totally different exchange, set up a wallet, and go through a whole different process,” he said. “There is a certain segment of the investor community that just does not think that is worth it.”
Paul agreed. He holds assets on US platforms like Coinbase. He said many people do not want another account. “If I have it through my normal Isa provider, I will be more likely to use it,” he said.
The products also come with tighter rules, like the fact that they must meet FCA disclosure standards. Providers fall under Consumer Duty obligations. They must warn users clearly. These investments are not covered by the Financial Services Compensation Scheme.
ISA structure draws criticism despite wider access
At first, UK crypto ETNs could sit inside normal stocks and shares ISAs. From April 6, HM Revenue and Customs said they must MOVE into Innovative Finance ISAs instead. These accounts were built for peer-to-peer lending and remain niche.
“The Innovative Finance Isa hasn’t been hugely successful in terms of uptake,” said Laith Khalaf from AJ Bell. He questioned why these products were placed there when the same assets can sit inside SIPPs and regular accounts.
Jason Hollands from Evelyn Partners called the setup “strange.” He said a few major platforms would launch a new Isa just for this. He also noted that crypto ETNs remain restricted mass market investments. That status requires strong risk warnings and tight controls on promotions.
Some critics questioned the broader goal. One fund manager said Isa tax benefits should support productive UK assets, not volatile ones. The debate is not new. Some argue Isas should boost UK markets. Others say they exist to help people save, not to direct capital.
Jason said, “If you’re in that school of thought that the government tax incentives should be aimed at stuff that benefits the UK economy, then you might argue, why would we do this for highly speculative assets that don’t actually invest in making it real or tangible?”
Russell Barlow from 21Shares rejected that view. He compared crypto volatility to single stocks. “We don’t prevent them from being owned in Isas,” he said. He likened the risk profile to early stage ventures.
Matthew from Invesco said friendlier rules do not push people to speculate. “It does not necessarily incentivise it. It puts it on a level playing field with other assets,” he said.
Laith said there could be another effect. Younger investors already holding crypto might add traditional assets once they enter mainstream platforms.
For Paul, the past still stings. After the 2021 ruling, he sold his ethereum. It later ROSE about 90%. “I thought the government was looking after people,” he said.
