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Welcome to Merrin Talks Your Money, the personal finance edition of Merin Talks Money and these bonus podcasts we talk about the best strategies for making the most of your money.

I'm Merin Zumset, Web Editor at Large for Bloomberg UK Wealth.

And I'm joint stepping author of the multi award winning Money Distilled newsletter and also a senior porto of Bloomberg.

I would like to say that it's only two awards, not multi.

I mean, maybe I should be a double award.

Double award winning.

I'll accept that.

I'll accept that.

Right.

Listen, John, you and I were not great fans of crypto.

We should be, but you know, we haven't quite got over the over the hump yet into it.

But listeners who do watched this stuff very closely, who love crypto, who want to own a lot of crypto, Obviously they have been keeping a very close eye on the way it is regulated in the UK.

And you might remember that a while back the FCA that Financial Conduct Authority band retail investors from investing in crypto exchange traded notes or etns.

Back in twenty twenty one you could before that you couldn't afterwards the time they said, oh, well, you know it's volatile.

There's lots of abuse, financial crime all over the place.

And the quote here inadequate understanding of crypto assets by retail consumers and a lack of legitimate investment need for retail consumers to invest in these products.

Now you may say those things still stand, but not everybody would agree and something has changed, right, yes.

Indeed, but or octobally it's just last week the FC lefted that mind.

Seeing that retail investors can no access crypto etns.

T did on an FCA approved UK based investment exchange, so you know, your typical UK platform.

So David Gayle, Executive Director of Payments and Digital Finance at the FCA said, since we're restricted to retail access to crypto atns, the market has evolved and products have become more mainstream and better understood, and lightly this we're providing consumers with more choice while ensuring there are protections in place.

This should mean people get the information they need to assess whether the level of risk is right for them.

Right.

I think that's probably other reasons.

Oh, you think there are other reasons do you think that other reasons might be bigcoin treasuries, for example.

I think they're the obvious reason on the investment side.

The other reason on the regulatory side is that Rachel Reeves has been twisting the regulators arms to try and get them to growth friendly things, and this was clearly an obvious stop to chuck.

I feel.

I mean, this is growth friendly for crypto assets, but whether that's good for UK GDP growth all n is another question.

But I kind of get that this is about growth and competitiveness inside this space.

Yeah, if your voice is bugging you to loosen up, then this is the sort of thing you can chuck and see.

Look, well, loosening up actually doing anything.

Okay.

So that's one reason when I look at it, I think, well, hang on, you know, they're just slightly overtaken by the fact that there are so many other ways into crypto these days, and the bitcoin treasury companies or the crypto treasury companies in particularly when we've talked about these on this podcast before.

If you can buy shares in a company that exists purely for the purpose of leveraged exposure to bitcoin, isn't it better to find a way to have a more straightforward asset class that maybe is not leveraged and provides a different, more regulated way for people to get exposure to crypto.

It seems to me that might have been the driver from the FCA side, or you'd prefer people to hold something less leveraged than a bitcoin treasury company.

Absolutely agree, I mean that makes sense as well, whenever the loose and the uploaded noisy directly to all your support and could always buy being easier in this stuff.

So I think you can never discount the amount of backsade covering that articulator will indulge in.

But definitely not meanly the big cooin traces that are a big thing, and they have overtaken it means stupid to be in the position.

But then actually, yeah.

Behind the cab like this, it really is okay, So here we are.

I think what we really need to talk about is what an et N is, how you can buy them, and whether this is really a more straightforward way for you to get exposure to crypto than just I mean, it's always a mystery to me when everyone doesn't open an account at the likes of coinbase and hold their bitcoin or whatever it else.

It is they want to hold directly but clearly not And at the moment, FCA numbers tell us that around twelve percent of adults in the UK hold crypto, which seems an incredibly high number to me.

I'm amazed by that number, significantly higher than I think, which of course explains why we've been so wrong on bitcoind of course, much more popular than we thinking this stuff is demand driven.

Okay, so round twelve percent and another twenty thirty percent say that if they could be if it was more regulated and more secure, then they would be interested.

Of course, people make the mistake of thinking that regulated means safe when it doesn't mean anything of the sort.

Yeah, I think a lot of time they're really talking about hassle.

If it was less hassle to buy from a shop that I trust and that I know like you know, hard grieves or interactive investor people who are less comfortable with opening and up and messing about with that.

But I mean, you're right, see on that point, about twelve percent of people that I've got a lot of friends who work in you know, normal non finance jobs, and they're far more actively engaged with kind of crypto portfolios.

With significant amounts of money and then they are with their pension or with individual stocks or anything like that.

And I think it's just something to be said for the argument that I mean, you've made this point.

It's the excitement in the fact you can make a lot.

Of money, make money with gold for example.

Yeah, I'm just.

Saying it is IG that this number came from.

By the way, thirty percent of UK adults would consider investing in crypto etn's IG found that younger adults are particularly entered in mine crypto etns, with fifty percent of eighteen to twenty four year old and forty nine percent of twenty five to thirty four year old expressing interest, so it is still very much a younger thing.

The idea behind this is crypto suddenly becomes less of a fringe trade, which clearly it isn't there for already twelve percent of people who are into into it regulated tool for building resilient portfolios.

So then we have to ask, hey, what is an ETN, John?

Can you answer that one?

An ETN, as far as you can walkout in the British cointext is basically like an ETF.

It's slightly different, but the differences are mainly technical.

When they somewhat to do, we can use its regulation and so it's a debt instrument that basically tracks the value of the underlying asset.

Yeah.

At the same time, in this case, the debt instrument itself is usually backed by a holding of the underlying asset.

And obviously you'll need to look at the individual atn but I think for the purposes of the theoretical ones that are coming out, you can basically think of it as an ETF.

It's just an ETF for crypto.

Okay, you can think of it an ETF, but it's not an ETF.

It's still a debt instrument, and that comes with all the risks that a debt instrument comes with.

So you've got the risk of the underlying thing itself, whatever crypto.

It is, right that the risk of that wibbling around in price, and then you've got all the risk comes with holding something that is debt as opposed to an actual asset.

You've got your counter plant to risk, et cetera, et cetera.

Yeah, no, I agree, And obviously this did become an issue in two thousand and eight financial crisis, But in my view, if you can in stay your money an ACCEPTO, then this is it's yet another thing to think about on top of all the other things you should ploably be thinking of it.

If you can stake your money and to accept or CURTNCY.

I suppose you have to cry about theft as well, don't you.

I mean, it's really unlikely that someone's going to get into hard groups Landsdown's stash of shell shares and NIKEM but crypto has a slightly different vibe crime noise.

That's an interesting point.

I thought that.

Okay, I suppose my point is just that that there's a lot of risk around something like an ETN.

You're not just buying a straightforward tracker.

You know, you buy a straightforward equity tracker.

It holds the equities in the main you know they're there, they're underlying.

But you buy an ETN that is supposed to return you the the same capital return as they're supposedly underlying crypto, you can't necessarily be sure that's going to happen.

There's lots, you know, TwixT and TwixT between the the act itself and the return that you might or might not get.

It's just a little higher risk anyway.

With that in mind, not everyone will be able to buy them, So yes, if you go, and you may remember some of you may remember the episode in which I told John that I had failed the coin based quiz to give me access to my account.

Remember that John, Yes, and I'm sure lots of listeners will go.

Well, she would, wouldn't she?

That woman knows nothing about crypto anyway, took me a couple of goals.

Turns out all the answers are online.

Not such big deal after all funding before, so crypto etns will be similar.

They're restricted mass market investments, so are MMI's, and that means that not everyone can get them.

You have to pass a quiz or something that proves that you are a sophisticated investor of the type that is able to deal with this slightly higher risk type of investment.

The only one that in Hargoo's landsdown has said that they thoroughly disapprove of the whole thing.

Bitcoin is not a portfolio ASID, it's not the kind of thing that you should have an a portfolio to meet your long term gains et cetera, et cetera.

But nonetheless they'll be having etns too, just not immediately.

I can see why half these lines don't specifically, is been very careful because obviously they had the issue we would for the while ago, which I think will have made them ultrasensitive about how they talk to retail customers.

I mean, at the same time, I don't necessarily disagree with them.

You know, I think there is probably a place for crypto in your portfolio, but it's a very small place and somewhere adjacent to your gold holding.

I think, Sorry, John, yeah, I think if you're going to hold it, then that's where you should think of it as as existing.

What is a bit like gold.

But I we set it in that same trying to avoid currency devaluation box and also good for crossing the border with if you actually need take out a dodge really fast.

But obviously it doesn't correlate with gold partially.

Now, now, as we've seen over the last the last few weeks, a couple of other things just to say before we finish on this.

The first one is that you can't just buy any old cryptocurrency ETN.

It's bitcoin and ethereum for now.

Other things says that you can put these etns into your SIP and your ISA, as long as that's something that the issuer has arranged, so you can do both those things.

Should you put cryptocurrencies in your or things that are linked to cryptocurrencies one way or another into your SIP or?

I said, that's another question, but you can ISA.

There is one slight wrinkle in the ISIS but apparently hm il see and I don't know.

It looks as if this might change.

But for now you can put in your stocks and shares ISA, but for some reason, from the next tax here you'll have to put it in an innovative finance is.

I reckon, I'm of that, don't you.

I'm not.

Finance ISIS Well exactly, Yeah, that seems like something that will change.

But although, to be honest, if there's one thing that we could say about a crypto ETN is that it is innovative finance.

Yeah, this is true, but maybe that is the leg place to put it.

And John, this will give you a fabulous opportunity to finally get some crypto exposure.

Excellent.

I can buy in absolutely.

I'm sure that it's still going to the moon.

I no doubt about it.

And does won't mean that you won't have to do the admin to open a coin base account, because I know you're never going to do this this way.

You can just take a chunky attension and stick it straight into a Bitcoin ETM, no admin required.

We'll all look forward to hearing how that goes for you.

I don't think i'll pass the test.

I was like to be looking the other day at one of the sample tests.

Quite hard, quite hard.

Well, but but but in good news, all the answers will be on the Internet in the next week or so.

It's been a bother at all.

That does put all the platforms under some pressure to make sure they constantly change the test.

They have rolling questions, et cetera, et cetera, try to make sure that they are fulfilling the brief of making sure that only suitable investors get this.

Obviously, we're not going to help anybody pass the test, but I'm sure that the internet will provide.

One last question from yeah, go on giving away this, like, realistically, how big a difference do you think this is going to make total There's still a lot of hoop jumping to buy this stuff.

There is an element of if I'm already in a treasury company, why bother.

And also if I wasn't going to open a coin base account, then why am I going to jump through the RMMI hoop?

Particularly whenever most of the people who are going to be offering this a little bit tentative because they are also aware that if it all blows up then they will almost certainly get an absolute loaded people chance in their armor, you know, claiming mis selling even a though that that wouldn't be fair, you know, more que for the people coming in like five years time something like that, like the.

Cause I don't know.

And it's a very good point, and that people who are enthusiastic at back crypto already on the admin the whole cryptop will people who are not as enthusiastic these hoops stick out there?

Well, we'll find out.

We'll find out.

You're not going to be judging about it either, right never, Okay, good, Thanks for listening to this week's Maren Drugs Your Money.

If you like us show, rate, review, and subscribe wherever you listen to podcasts.

Also, be shure to follow me and John on ex or Twitter at marins w and John Underscore Stapic.

This episode was produced by Moses and Aman SUMMERSIDI questions and comments on this show and all our shows are always welcome.

Our show email is Merrior Money at Bloomberg dot net