Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Welcome to Merrin Talks
Speaker 1: Your Money, the personal finance edition of Merin Talks Money
Speaker 1: and these bonus podcasts we talk about the best strategies
Speaker 1: for making the most of your money. I'm Merin Zumset,
Speaker 1: Web Editor at Large for Bloomberg UK Wealth.
Speaker 2: And I'm joint stepping author of the multi award winning
Speaker 2: Money Distilled newsletter and also a senior porto of Bloomberg.
Speaker 1: I would like to say that it's only two awards,
Speaker 1: not multi.
Speaker 2: I mean, maybe I should be a double award.
Speaker 1: Double award winning. I'll accept that. I'll accept that. Right. Listen, John,
Speaker 1: you and I were not great fans of crypto. We
Speaker 1: should be, but you know, we haven't quite got over
Speaker 1: the over the hump yet into it. But listeners who
Speaker 1: do watched this stuff very closely, who love crypto, who
Speaker 1: want to own a lot of crypto, Obviously they have
Speaker 1: been keeping a very close eye on the way it
Speaker 1: is regulated in the UK. And you might remember that
Speaker 1: a while back the FCA that Financial Conduct Authority band
Speaker 1: retail investors from investing in crypto exchange traded notes or etns.
Speaker 1: Back in twenty twenty one you could before that you
Speaker 1: couldn't afterwards the time they said, oh, well, you know
Speaker 1: it's volatile. There's lots of abuse, financial crime all over
Speaker 1: the place. And the quote here inadequate understanding of crypto
Speaker 1: assets by retail consumers and a lack of legitimate investment
Speaker 1: need for retail consumers to invest in these products. Now
Speaker 1: you may say those things still stand, but not everybody
Speaker 1: would agree and something has changed, right, yes.
Speaker 2: Indeed, but or octobally it's just last week the FC
Speaker 2: lefted that mind. Seeing that retail investors can no access
Speaker 2: crypto etns. T did on an FCA approved UK based
Speaker 2: investment exchange, so you know, your typical UK platform. So
Speaker 2: David Gayle, Executive Director of Payments and Digital Finance at
Speaker 2: the FCA said, since we're restricted to retail access to
Speaker 2: crypto atns, the market has evolved and products have become
Speaker 2: more mainstream and better understood, and lightly this we're providing
Speaker 2: consumers with more choice while ensuring there are protections in place.
Speaker 2: This should mean people get the information they need to
Speaker 2: assess whether the level of risk is right for them.
Speaker 1: Right.
Speaker 2: I think that's probably other reasons.
Speaker 1: Oh, you think there are other reasons do you think
Speaker 1: that other reasons might be bigcoin treasuries, for example.
Speaker 2: I think they're the obvious reason on the investment side.
Speaker 2: The other reason on the regulatory side is that Rachel
Speaker 2: Reeves has been twisting the regulators arms to try and
Speaker 2: get them to growth friendly things, and this was clearly
Speaker 2: an obvious stop to chuck. I feel.
Speaker 1: I mean, this is growth friendly for crypto assets, but
Speaker 1: whether that's good for UK GDP growth all n is
Speaker 1: another question. But I kind of get that this is
Speaker 1: about growth and competitiveness inside this space.
Speaker 2: Yeah, if your voice is bugging you to loosen up,
Speaker 2: then this is the sort of thing you can chuck
Speaker 2: and see. Look, well, loosening up actually doing anything.
Speaker 1: Okay. So that's one reason when I look at it,
Speaker 1: I think, well, hang on, you know, they're just slightly
Speaker 1: overtaken by the fact that there are so many other
Speaker 1: ways into crypto these days, and the bitcoin treasury companies
Speaker 1: or the crypto treasury companies in particularly when we've talked
Speaker 1: about these on this podcast before. If you can buy
Speaker 1: shares in a company that exists purely for the purpose
Speaker 1: of leveraged exposure to bitcoin, isn't it better to find
Speaker 1: a way to have a more straightforward asset class that
Speaker 1: maybe is not leveraged and provides a different, more regulated
Speaker 1: way for people to get exposure to crypto. It seems
Speaker 1: to me that might have been the driver from the
Speaker 1: FCA side, or you'd prefer people to hold something less
Speaker 1: leveraged than a bitcoin treasury company.
Speaker 2: Absolutely agree, I mean that makes sense as well, whenever
Speaker 2: the loose and the uploaded noisy directly to all your
Speaker 2: support and could always buy being easier in this stuff.
Speaker 2: So I think you can never discount the amount of
Speaker 2: backsade covering that articulator will indulge in. But definitely not
Speaker 2: meanly the big cooin traces that are a big thing,
Speaker 2: and they have overtaken it means stupid to be in
Speaker 2: the position. But then actually, yeah.
Speaker 1: Behind the cab like this, it really is okay, So
Speaker 1: here we are. I think what we really need to
Speaker 1: talk about is what an et N is, how you
Speaker 1: can buy them, and whether this is really a more
Speaker 1: straightforward way for you to get exposure to crypto than
Speaker 1: just I mean, it's always a mystery to me when
Speaker 1: everyone doesn't open an account at the likes of coinbase
Speaker 1: and hold their bitcoin or whatever it else. It is
Speaker 1: they want to hold directly but clearly not And at
Speaker 1: the moment, FCA numbers tell us that around twelve percent
Speaker 1: of adults in the UK hold crypto, which seems an
Speaker 1: incredibly high number to me. I'm amazed by that number,
Speaker 1: significantly higher than I think, which of course explains why
Speaker 1: we've been so wrong on bitcoind of course, much more
Speaker 1: popular than we thinking this stuff is demand driven. Okay,
Speaker 1: so round twelve percent and another twenty thirty percent say
Speaker 1: that if they could be if it was more regulated
Speaker 1: and more secure, then they would be interested. Of course,
Speaker 1: people make the mistake of thinking that regulated means safe
Speaker 1: when it doesn't mean anything of the sort.
Speaker 2: Yeah, I think a lot of time they're really talking
Speaker 2: about hassle. If it was less hassle to buy from
Speaker 2: a shop that I trust and that I know like
Speaker 2: you know, hard grieves or interactive investor people who are
Speaker 2: less comfortable with opening and up and messing about with that.
Speaker 2: But I mean, you're right, see on that point, about
Speaker 2: twelve percent of people that I've got a lot of
Speaker 2: friends who work in you know, normal non finance jobs,
Speaker 2: and they're far more actively engaged with kind of crypto portfolios.
Speaker 2: With significant amounts of money and then they are with
Speaker 2: their pension or with individual stocks or anything like that.
Speaker 2: And I think it's just something to be said for
Speaker 2: the argument that I mean, you've made this point. It's
Speaker 2: the excitement in the fact you can make a lot.
Speaker 1: Of money, make money with gold for example.
Speaker 2: Yeah, I'm just.
Speaker 1: Saying it is IG that this number came from. By
Speaker 1: the way, thirty percent of UK adults would consider investing
Speaker 1: in crypto etn's IG found that younger adults are particularly
Speaker 1: entered in mine crypto etns, with fifty percent of eighteen
Speaker 1: to twenty four year old and forty nine percent of
Speaker 1: twenty five to thirty four year old expressing interest, so
Speaker 1: it is still very much a younger thing. The idea
Speaker 1: behind this is crypto suddenly becomes less of a fringe trade,
Speaker 1: which clearly it isn't there for already twelve percent of
Speaker 1: people who are into into it regulated tool for building
Speaker 1: resilient portfolios. So then we have to ask, hey, what
Speaker 1: is an ETN, John? Can you answer that one?
Speaker 2: An ETN, as far as you can walkout in the
Speaker 2: British cointext is basically like an ETF. It's slightly different,
Speaker 2: but the differences are mainly technical. When they somewhat to do,
Speaker 2: we can use its regulation and so it's a debt
Speaker 2: instrument that basically tracks the value of the underlying asset.
Speaker 1: Yeah.
Speaker 2: At the same time, in this case, the debt instrument
Speaker 2: itself is usually backed by a holding of the underlying asset.
Speaker 2: And obviously you'll need to look at the individual atn
Speaker 2: but I think for the purposes of the theoretical ones
Speaker 2: that are coming out, you can basically think of it
Speaker 2: as an ETF. It's just an ETF for crypto.
Speaker 1: Okay, you can think of it an ETF, but it's
Speaker 1: not an ETF. It's still a debt instrument, and that
Speaker 1: comes with all the risks that a debt instrument comes with.
Speaker 1: So you've got the risk of the underlying thing itself,
Speaker 1: whatever crypto. It is, right that the risk of that
Speaker 1: wibbling around in price, and then you've got all the
Speaker 1: risk comes with holding something that is debt as opposed
Speaker 1: to an actual asset. You've got your counter plant to risk,
Speaker 1: et cetera, et cetera.
Speaker 2: Yeah, no, I agree, And obviously this did become an
Speaker 2: issue in two thousand and eight financial crisis, But in
Speaker 2: my view, if you can in stay your money an ACCEPTO,
Speaker 2: then this is it's yet another thing to think about
Speaker 2: on top of all the other things you should ploably
Speaker 2: be thinking of it. If you can stake your money
Speaker 2: and to accept or CURTNCY.
Speaker 1: I suppose you have to cry about theft as well,
Speaker 1: don't you. I mean, it's really unlikely that someone's going
Speaker 1: to get into hard groups Landsdown's stash of shell shares
Speaker 1: and NIKEM but crypto has a slightly different vibe crime noise.
Speaker 2: That's an interesting point. I thought that.
Speaker 1: Okay, I suppose my point is just that that there's
Speaker 1: a lot of risk around something like an ETN. You're
Speaker 1: not just buying a straightforward tracker. You know, you buy
Speaker 1: a straightforward equity tracker. It holds the equities in the
Speaker 1: main you know they're there, they're underlying. But you buy
Speaker 1: an ETN that is supposed to return you the the
Speaker 1: same capital return as they're supposedly underlying crypto, you can't
Speaker 1: necessarily be sure that's going to happen. There's lots, you know,
Speaker 1: TwixT and TwixT between the the act itself and the
Speaker 1: return that you might or might not get. It's just
Speaker 1: a little higher risk anyway. With that in mind, not
Speaker 1: everyone will be able to buy them, So yes, if
Speaker 1: you go, and you may remember some of you may
Speaker 1: remember the episode in which I told John that I
Speaker 1: had failed the coin based quiz to give me access
Speaker 1: to my account. Remember that John, Yes, and I'm sure
Speaker 1: lots of listeners will go. Well, she would, wouldn't she?
Speaker 1: That woman knows nothing about crypto anyway, took me a
Speaker 1: couple of goals. Turns out all the answers are online.
Speaker 1: Not such big deal after all funding before, so crypto
Speaker 1: etns will be similar. They're restricted mass market investments, so
Speaker 1: are MMI's, and that means that not everyone can get them.
Speaker 1: You have to pass a quiz or something that proves
Speaker 1: that you are a sophisticated investor of the type that
Speaker 1: is able to deal with this slightly higher risk type
Speaker 1: of investment. The only one that in Hargoo's landsdown has
Speaker 1: said that they thoroughly disapprove of the whole thing. Bitcoin
Speaker 1: is not a portfolio ASID, it's not the kind of
Speaker 1: thing that you should have an a portfolio to meet
Speaker 1: your long term gains et cetera, et cetera. But nonetheless
Speaker 1: they'll be having etns too, just not immediately.
Speaker 2: I can see why half these lines don't specifically, is
Speaker 2: been very careful because obviously they had the issue we
Speaker 2: would for the while ago, which I think will have
Speaker 2: made them ultrasensitive about how they talk to retail customers.
Speaker 2: I mean, at the same time, I don't necessarily disagree
Speaker 2: with them. You know, I think there is probably a
Speaker 2: place for crypto in your portfolio, but it's a very
Speaker 2: small place and somewhere adjacent to your gold holding. I think, Sorry, John, yeah,
Speaker 2: I think if you're going to hold it, then that's
Speaker 2: where you should think of it as as existing.
Speaker 1: What is a bit like gold.
Speaker 2: But I we set it in that same trying to
Speaker 2: avoid currency devaluation box and also good for crossing the
Speaker 2: border with if you actually need take out a dodge
Speaker 2: really fast. But obviously it doesn't correlate with gold partially.
Speaker 1: Now, now, as we've seen over the last the last
Speaker 1: few weeks, a couple of other things just to say
Speaker 1: before we finish on this. The first one is that
Speaker 1: you can't just buy any old cryptocurrency ETN. It's bitcoin
Speaker 1: and ethereum for now. Other things says that you can
Speaker 1: put these etns into your SIP and your ISA, as
Speaker 1: long as that's something that the issuer has arranged, so
Speaker 1: you can do both those things. Should you put cryptocurrencies
Speaker 1: in your or things that are linked to cryptocurrencies one
Speaker 1: way or another into your SIP or? I said, that's
Speaker 1: another question, but you can ISA.
Speaker 2: There is one slight wrinkle in the ISIS but apparently
Speaker 2: hm il see and I don't know. It looks as
Speaker 2: if this might change. But for now you can put
Speaker 2: in your stocks and shares ISA, but for some reason,
Speaker 2: from the next tax here you'll have to put it
Speaker 2: in an innovative finance is.
Speaker 1: I reckon, I'm of that, don't you. I'm not.
Speaker 2: Finance ISIS Well exactly, Yeah, that seems like something that
Speaker 2: will change.
Speaker 1: But although, to be honest, if there's one thing that
Speaker 1: we could say about a crypto ETN is that it
Speaker 1: is innovative finance.
Speaker 2: Yeah, this is true, but maybe that is the leg
Speaker 2: place to put it.
Speaker 1: And John, this will give you a fabulous opportunity to
Speaker 1: finally get some crypto exposure.
Speaker 2: Excellent. I can buy in absolutely. I'm sure that it's
Speaker 2: still going to the moon.
Speaker 1: I no doubt about it. And does won't mean that
Speaker 1: you won't have to do the admin to open a
Speaker 1: coin base account, because I know you're never going to
Speaker 1: do this this way. You can just take a chunky
Speaker 1: attension and stick it straight into a Bitcoin ETM, no
Speaker 1: admin required. We'll all look forward to hearing how that
Speaker 1: goes for you.
Speaker 2: I don't think i'll pass the test.
Speaker 1: I was like to be looking the other day at
Speaker 1: one of the sample tests. Quite hard, quite hard. Well,
Speaker 1: but but but in good news, all the answers will
Speaker 1: be on the Internet in the next week or so.
Speaker 1: It's been a bother at all. That does put all
Speaker 1: the platforms under some pressure to make sure they constantly
Speaker 1: change the test. They have rolling questions, et cetera, et cetera,
Speaker 1: try to make sure that they are fulfilling the brief
Speaker 1: of making sure that only suitable investors get this. Obviously,
Speaker 1: we're not going to help anybody pass the test, but
Speaker 1: I'm sure that the internet will provide.
Speaker 2: One last question from yeah, go on giving away this, like, realistically,
Speaker 2: how big a difference do you think this is going
Speaker 2: to make total There's still a lot of hoop jumping
Speaker 2: to buy this stuff. There is an element of if
Speaker 2: I'm already in a treasury company, why bother. And also
Speaker 2: if I wasn't going to open a coin base account,
Speaker 2: then why am I going to jump through the RMMI hoop?
Speaker 2: Particularly whenever most of the people who are going to
Speaker 2: be offering this a little bit tentative because they are
Speaker 2: also aware that if it all blows up then they
Speaker 2: will almost certainly get an absolute loaded people chance in
Speaker 2: their armor, you know, claiming mis selling even a though
Speaker 2: that that wouldn't be fair, you know, more que for
Speaker 2: the people coming in like five years time something like that,
Speaker 2: like the.
Speaker 1: Cause I don't know. And it's a very good point,
Speaker 1: and that people who are enthusiastic at back crypto already
Speaker 1: on the admin the whole cryptop will people who are
Speaker 1: not as enthusiastic these hoops stick out there? Well, we'll
Speaker 1: find out.
Speaker 2: We'll find out.
Speaker 1: You're not going to be judging about it either, right never, Okay, good,
Speaker 1: Thanks for listening to this week's Maren Drugs Your Money.
Speaker 1: If you like us show, rate, review, and subscribe wherever
Speaker 1: you listen to podcasts. Also, be shure to follow me
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Speaker 1: John Underscore Stapic. This episode was produced by Moses and
Speaker 1: Aman SUMMERSIDI questions and comments on this show and all
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Speaker 1: Money at Bloomberg dot net