Sammie Ellard-King
I’m Sammie, a money expert and business owner passionate about helping you take control of your wallet. My mission with Up the Gains is to create a safe space to help improve your finances, cut your costs and make you feel good while doing it.
Whether you like it or not, Bitcoin is here to stay. With so much of it now owned by institutional investors (big banks and hedge funds) and tied up in people’s accounts worldwide, it’s highly improbable that it’ll ever be worthless.
We’ve enjoyed the crypto ride over the past few years. It’s in the news daily, so it’s difficult to avoid it even if you want to.
That said, you’ve most likely landed here because you’d like to know if you can add Bitcoin to your ISA. If that’s you, then read on.
We’ll explore how to add Bitcoin to your ISA, whether it’s even possible, if it’s safe and, most importantly, whether it’s worth it.
Bitcoin can be both exciting and frightening for investors. The price can be so volatile that people can either get extremely rich or lose fortunes almost overnight.
Just as you think things are starting to normalise, another major drama kicks off. Everyone knows it’s a high-risk, action-packed ride investing in cryptocurrencies, so it’s essential to understand the risks before doing so.
Open an account and enjoy social investing with a wide selection of available stocks, funds, trusts and cryptocurrency.
Table of Contents
How to add Bitcoin to your ISA?
The first thing to note is you can’t currently directly purchase Bitcoin into your ISA. Cryptocurrency as a token or coin format is unavailable for Stocks and Shares ISAs as they operate on a different system to the stock market called crypto exchanges.Â
To gain cryptocurrency exposure in an ISA, you must purchase a fund that directly owns cryptocurrencies or has exposure to blockchain technology.Â
You technically own cryptocurrencies without holding the currency itself, which has pros and cons.Â
ProsÂ
- You don’t pay tax – Bitcoin, if traded outside of an ISA, is liable for capital gains tax on profits
- Your overall risk is usually lower investing in funds rather than direct cryptocurrencies
ConsÂ
- You have less selection than crypto exchangesÂ
- You don’t own Bitcoin directly
How to buy Bitcoin in an ISA?
You can’t buy Bitcoin directly, but you can invest in what’s called exchange-traded funds that hold cryptocurrency or invest in the technology. New funds have cropped up all over the place, and there are now lots of opportunities to get crypto exposure.Â
Below we discuss three types of Bitcoin funds you can find on most exchanges.Â
For example, some ISAs depending on the providers, won’t give you full access to the open stock market, so if you’re looking for crypto exposure choosing an ISA like Hargreaves Lansdown or Trading 212 would be best.
Blockchain technology
For those new to crypto, blockchain technology is how it runs. Blockchain is the tech, and Bitcoin is a currency that uses the technology to operate.Â
Buying a fund that invests in blockchain technology is a good way to get exposure to the cryptocurrency market as a whole. Investing in the tech that they use means you don’t have the risks of owning a single currency; rather, you’re looking at the entire market and innovation within it. Â
Bitcoin exposure
There are two parts to gaining direct Bitcoin exposure. Some funds will now directly own Cryptocurrencies within them. For example, funds like ARK by the infamous Cathie Wood directly own a selection of crypto, including Bitcoin.Â
The second side of this owns companies that have Bitcoin on their balance sheet. Most famously, Tesla bought millions worth of Bitcoin and sold it for a profit months later. Companies like Square, which is a payment solutions provider, have also bought Bitcoin.
Bitcoin MinersÂ
There are some funds out there that invest in mining Bitcoin, meaning they directly hold Bitcoin on their balance sheet as they mine more of it.Â
These operations are large-scale, and some of them are mining hundreds of Bitcoin a month.
What are the best crypto funds for an ISA?
Here we look at some of the most popular funds for you to invest in that are involved in cryptocurrency.Â
First up is Argo – this fund is listed on the London Stock Exchange and has over 16,000 mining computers. They mined nearly 2,500 Bitcoins in 2020 and this number is set to increase as they expand.
BNY Mellon Blockchain InnovationÂ
This fund invests directly in blockchain technology owning anywhere between 30-50 different companies at one time. It’s largest holdings are companies like BLOCK, SAP & ASX.
These funds directly own Bitcoin and was set up for investors to help track the amount of Bitcoin. This has proved harder than at first, though, as the fund often trades at a discount to the Bitcoin price. It is, however, a good way to own Bitcoin without directly owning the coin itself.
Open an account and enjoy social investing with a wide selection of available stocks, funds, trusts and cryptocurrency.
FAQs
Is crypto worth adding to an ISA?
This totally depends on your financial situation and your risk tolerance. We are not here to suggest you should take any kind of stance, and it’s vital to always do your own research before making any kind of investment.Â
That being said, a small exposure to anything you believe will continue to do well is never a bad thing.
Can I buy Bitcoin with my UK bank account?
There are several UK banks that are crypto-friendly. The most notable ones are Revolut, Monzo, Royal Bank of Scotland and Nationwide.Â
It’s vital to check what kind of purchases you can make as each will differ, and some only allow wallets, with others allowing direct purchases.Â
What to consider before investing in crypto?
The risks! It can be extremely fruitful to invest in cryptocurrencies, but it can also be very painful too. I would take some advice from a financial advisor or a successful investor you know before jumping into the markets.Â
Conclusion
So there you have it. You can now answer how to add Bitcoin to your ISA. It is certainly possible, but you must invest in funds to do so.Â
Directly owning cryptocurrency is something that I’m sure will be available in the future, but for now, this is your only route.
Disclaimer: we have a small exposure to crypto within our own ISA, but it forms part of a balanced portfolio, and in fact, our Bitcoin exposure is minimal.
View the best stocks and shares ISAs on the market right now.
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Disclaimer: Content on this page is for informational purposes and does not constitute financial advice. Always do your own research before making a financially related decision.
