‘Bitcoin is not an asset class’: UK’s biggest investment platform has a stark warning for investors

A major trading platform in the U.K. has issued a stark warning to investors hoping to cash in on relaxed crypto rules: cryptocurrencies should not be in your portfolio.

A longstanding U.K. ban on retail investors being able to access crypto exchange-traded notes (ETNs) was lifted on Oct. 8. Exchange-traded notes are debt instruments linked to one or more specified assets. In this case, they give traders exposure to digital tokens through the use of a regulated exchange.

The new rules sparked a warning from Hargreaves Lansdowne — the U.K.’s biggest retail investment platform — which urged British retail investors to be cautious.

“The HL Investment view is that bitcoin is not an asset class, and we do not think cryptocurrency has characteristics that mean it should be included in portfolios for growth or income and shouldn’t be relied upon to help clients meet their financial goals,” Hargreaves Lansdowne said in a statement.

“Performance assumptions are not possible to analyse for crypto, and unlike other alternative asset classes it has no intrinsic value.”

When U.K. officials announced earlier this year that the ETN ban would be overturned, they argued the move would support “the growth and competitiveness of the U.K.’s crypto industry.” It was hailed by crypto firms as a major breakthrough for the sector in Britain.

The government also ruled on Wednesday that investors will be able to hold crypto ETNs in stocks and shares ISA accounts, an account where up to £20,000 ($26,753) a year can be invested tax-free.

Cryptocurrencies, which are decentralized and therefore not regulated by central authorities like governments, have their critics and prices are notoriously volatile. In 2022, a so-called “crypto winter” saw investors lose $2 trillion. Bitcoin — the most commonly traded cryptocurrency — has led to major returns for early investors, however, and was last seen trading around $121,508.

Still, Hargreaves Lansdowne urged investors to consider the risks attached to all cryptocurrencies, including bitcoin.

“While longer-term returns of bitcoin have been positive, bitcoin has experienced several periods of extreme losses and is a highly volatile investment — much riskier than stocks or bonds,” the company said in its statement this week.

The firm said, however, that it recognized that some traders wished to “speculate with cryptocurrency ETNs,” and that it would therefore offer “appropriate clients” the opportunity to do so from early 2026.

Last month, Morgan Stanley said it was close to offering crypto trading to retail investors through its E-Trade division. The bank was the first major U.S. bank to offer wealthy clients access to bitcoin funds — a move that others have since followed.

JPMorgan, meanwhile, plans to get involved in the stablecoin space, despite CEO Jamie Dimon being vocal in his criticism of crypto. Billionaire investor Warren Buffett has also openly lashed out at cryptocurrencies.

Chris Mellor, head of EMEA ETF equity product management at Invesco, told CNBC on Thursday that he believes digital assets can offer investors a hedge against volatility in more 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. With the caveat that correlations can change, in recent months we have observed that bitcoin has displayed a very low correlation with stocks, U.S. Treasuries and gold.”

Meanwhile, Nigel Green, CEO of financial consultancy DeVere Group, argued that bitcoin’s recent climb past the $125,000 mark was a signal that 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. Short-term swings are inevitable when capital rotates at this scale.”

Green labeled this “a structural realignment, not a temporary rally” for bitcoin, and pointed to the Trump administration’s favorable policy mix as offering further support for its credibility.

“The hands holding bitcoin have become stronger, more institutional, and more patient,” he added. “Bitcoin, for investors who take a strategic view, remains a solid, enduring investment.”

— CNBC’s Ryan Browne and Hugh Son contributed to this article.