Buying Bitcoin (BTC) is a popular investment today. Across the world, investors are adding the crypto-asset to their portfolios in an effort to enhance their returns and diversify away from traditional assets such as stocks and bonds. But can you buy Bitcoin in a Stocks and Shares ISA or Self-Invested Personal Pension (SIPP)? Let’s take a look at the landscape for UK investors.
Buying Bitcoin in the UK is a relatively easy process these days. Today, there are several well-known platforms that offer access to the digital asset including Coinbase, Revolut, and eToro.
However, unfortunately, the crypto-asset cannot be bought for a Stocks and Shares ISA or SIPP directly. Currently, it has to be held in a regular investment account.
Buying Bitcoin in an ISA
There are ways to get indirect Bitcoin exposure within a Stocks and Shares ISA or SIPP. One way is to invest in companies that own a lot of Bitcoin. An example of such a company is Strategy (MSTR:NASDAQ) (formerly MicroStrategy).
It’s a US-listed technology business that sees itself as a Bitcoin treasury company. It has been buying the crypto-asset aggressively in recent years. And currently, it owns about 500,000 Bitcoins. If the price of Bitcoin was to increase significantly, the value of this company should increase too, in theory.
It’s worth pointing out, however, that this is a high-risk stock. It can be incredibly volatile and we have seen this volatility recently as the price of Bitcoin has fallen.
Another option to consider is investing in companies that play an important role in the Bitcoin ecosystem. An example here is Coinbase (COIN:NASDAQ). It operates one of the world’s largest crypto exchanges. If more investors embrace crypto-assets in the years ahead, this stock could do well. However, there are no guarantees it will, of course. Crypto-assets are a relatively new asset class so we can’t be sure they’ll be around in the long run. And they can experience periods where there is a lack of interest from investors (known as ‘Crypto Winters’).
Buying Bitcoin for your pension (SIPP)
If you want to buy Bitcoin for your retirement, an ETF will give you more diversified exposure.
One option to highlight here is the VanEck Crypto and Blockchain Innovators UCITS ETF (DAGB: LON). This is an ETF that invests in companies that are using blockchain to transform finance and other sectors.
With this ETF, one gets diversified exposure to digital asset exchanges, crypto miners, and other infrastructure companies behind digital currencies.
Some companies in the ETF at present include Coinbase, Strategy, Block, and Mara Holdings. It should be noted, however, that this ETF hasn’t performed well recently. Over the last three years, its share price has fallen while the price of Bitcoin has more than doubled.
High-risk investments
It needs to be stressed that all three of these investments are high risk (as is Bitcoin). But the advantage is that they can potentially be bought for a Stocks and Shares ISA or SIPP and traded with no Capital Gains Tax (CGT) implications.
Based in London, Edward is a distinguished investment writer with an extensive client portfolio comprising a diverse array of prominent financial services firms across the globe. With over 15 years of hands-on experience in private wealth management and institutional asset management, both in the UK and Australia, he possesses a profound understanding of the finance industry.
Before establishing himself as a writer, Edward earned a Commerce degree from the prestigious University of Melbourne. Complementing his academic background, he holds the esteemed Investment Management Certificate (IMC) and is a proud holder of the Chartered Financial Analyst (CFA) qualification.
Widely recognized as a sought-after investment expert, Edward’s insightful perspectives and analyses have been featured on sites such as BlackRock, Credit Suisse, WisdomTree, Motley Fool, eToro, and CMC Markets, among others.
You can contact Ed at edward@goodmoneyguide.com
