We checked with three personal finance analysts ahead of the ISA and SIPP deadline
If the question is can you include bitcoin in your ISA or SIPP, the short answer is “no”. The five-second answer is “sort of, but are you sure you want to?” And the two-minute answer is below:
It is not possible to hold Bitcoin directly in an ISA, for starters, and while there are exchange-traded products (ETPs) linked to Bitcoin, the UK financial regulator has banned the sale of ETP linked to bitcoin to retail investors.
However, Bitcoin miner Argo Blockchain is one way investors can get some sort of exposure within their ISA or SIPP.
In fact, Argo has been one of the most popular shares traded across UK investment platforms so far this year.
“Obviously any exposure to cryptocurrency comes with high risks attached, due to the extreme volatility of the underlying asset,” says Laith Khalaf, financial analyst at AJ Bell.
“Only experienced investors with large and well diversified portfolios should even consider gaining exposure, and even then it should be with a small amount of money they are willing to lose.”
Myron Jobson, personal finance campaigner at Interactive Investor, says: “You can’t invest in Bitcoin or any cryptocurrencies directly through mainstream DIY investment platforms”.
However, he says the spike in popularity of Argo Blockchain, which can be held in an ISA or SIPP, is indicative of a broader interest in crypto.
“For many mainstream investors, investment in the company is a speculative, high-risk play on cryptocurrency growth story, without having direct holding in cryptoassets.
“Bitcoin is notoriously volatile and for many investors, the price swings have been simply too wild to stomach,” Jobson says.
He also makes the point that, unlike conventional stocks and shares investments where there are some metrics like price-to-earnings ratio to help investors value stocks, for investors used to choosing shares or funds, valuing bitcoin is very different.
“Things like the cost of transaction and mining the Bitcoin can give you an idea of what they’re worth, but this sort of information is not always easy to find,” Jobson says, with the sheer newness of bitcoin and other cryptocurrencies means they have not built up enough of a track record for any meaningful conclusions on trends and behaviour to be drawn.
“Whether Bitcoin will continue to outperform remains to be seen. However, investment into the cryptocurrency from players from the mainstream investment industry could serves to give further legitimacy to Bitcoin but the jury is still very much out.
“It is difficult for the everyday investor to ignore the meteoric rise of Bitcoin at a time when the traditional assets are having to work harder to produce good returns. But we have seen all this before, and it’s come crashing down to earth in the past. Whether history will repeat itself remains to be seen, but there is a sense from some of ‘this time it’ll be different’, stoked by the participation of mainstream investment firms.”
It’s quite simple, says Sarah Coles, personal finance analyst at Hargreaves Lansdown, “you cannot put money in bitcoin in your ISA and SIPP because, quite rightly, bitcoin derivatives have been banned by the FCA so they’re no longer saleable”.
“Putting money into bitcoin is speculating on a currency with no intrinsic value, whereas SIPPS and ISAs are about long term investment.
“Bitcoin should attract beer money not pension money.”