What to Know:
- •The U.K. ended a ban on crypto exchange-traded notes for retail investors on Oct. 8, allowing regulated access to digital tokens through traditional exchanges.
- •Hargreaves Lansdowne stated cryptocurrencies lack characteristics that would justify portfolio inclusion and cannot be analyzed using standard performance assumptions.
- •Bitcoin traded near $121,508 as major institutions like Morgan Stanley and JPMorgan moved into crypto services despite ongoing debate over digital asset legitimacy.
Platform Rejects Digital Tokens Despite Regulatory Shift
The regulatory change came after U.K. officials announced earlier this year their intention to overturn the exchange-traded note ban, arguing the move would bolster the competitiveness of Britain's crypto industry. Crypto firms celebrated the decision as a breakthrough for the sector. The government also ruled Wednesday that investors can hold crypto ETNs in stocks and shares ISA accounts, where up to £20,000 ($26,753) annually can be invested without tax consequences.
Hargreaves Lansdowne's statement challenged the optimism surrounding the regulatory shift.
"Performance assumptions are not possible to analyze for crypto, and unlike other alternative asset classes it has no intrinsic value," the firm said.
The platform acknowledged some traders wanted to "speculate with cryptocurrency ETNs" and said it would offer access to "appropriate clients" starting early 2026, though it maintained its cautious stance.
The company pointed to Bitcoin's track record as evidence of risk. While early investors in the most commonly traded cryptocurrency saw major returns, the firm noted Bitcoin "has experienced several periods of extreme losses and is a highly volatile investment — much riskier than stocks or bonds." The 2022 "crypto winter" saw investors lose $2 trillion across digital asset markets.
Exchange-traded notes function as debt instruments tied to specified assets. In the crypto context, they provide traders exposure to digital tokens through regulated exchanges rather than requiring direct purchase of the underlying cryptocurrency. The products allow traditional investors to gain crypto exposure within familiar brokerage frameworks.
Divided Views Among Financial Giants
Major financial institutions have taken conflicting positions on digital assets. Morgan Stanley said last month it was close to offering crypto trading to retail investors through its E-Trade division, making it the first major U.S. bank to offer wealthy clients access to Bitcoin funds. Other banks have followed that move.
JPMorgan plans to enter the stablecoin market despite CEO Jamie Dimon's vocal criticism of cryptocurrencies. Billionaire investor Warren Buffett has also openly criticized digital currencies. The split reflects broader uncertainty in traditional finance about how to approach the emerging asset category.
Chris Mellor, head of EMEA ETF equity product management at Invesco, told CNBC on Thursday that digital assets can hedge against volatility in traditional asset classes. "Bitcoin and other cryptocurrencies are sometimes considered 'digital gold' and questions have been raised around whether Bitcoin might one day replace gold as the non-fiat asset of choice," he said via email. "In our opinion, there is room for both in portfolios."
Mellor noted that Bitcoin recently displayed very low correlation with stocks, U.S. Treasuries and gold, though he cautioned correlations can change.
That statistical independence could make Bitcoin attractive for portfolio diversification, according to supporters of the asset class.
Nigel Green, CEO of financial consultancy DeVere Group, argued Bitcoin's recent climb past the $125,000 mark signaled digital assets have entered the financial mainstream. "Investors are no longer treating Bitcoin as a curiosity at the edge of the market," he told CNBC. "Volatility still exists, but it is now productive volatility, the kind that accompanies price discovery in a maturing market."
Green called the price movement "a structural realignment, not a temporary rally" and pointed to the Trump administration's favorable policy mix as supporting Bitcoin's credibility. "The hands holding Bitcoin have become stronger, more institutional, and more patient," he said. "Bitcoin, for investors who take a strategic view, remains a solid, enduring investment."
Understanding the Terms
Cryptocurrencies operate as decentralized digital currencies not regulated by central authorities like governments. Bitcoin, launched in 2009, remains the most widely traded and serves as a benchmark for the broader market. Stablecoins are cryptocurrencies designed to maintain steady value by pegging to traditional assets like the U.S. dollar.
Exchange-traded notes differ from exchange-traded funds in their legal structure. ETNs are unsecured debt obligations of the issuer, while ETFs hold actual assets. Both trade on exchanges like stocks, but ETNs carry credit risk tied to the issuing financial institution.
Closing Thoughts
The debate over cryptocurrency legitimacy continues as prices fluctuate and institutional adoption expands. Hargreaves Lansdowne's warning represents one of the more direct rejections from a major platform even as regulatory barriers fall. Bitcoin's price movements and institutional interest suggest the asset class will remain part of investment discussions regardless of skepticism from established players in traditional finance.