Syed Rahman considers the stark message given by the UK’s biggest investment platform.
The UK’s largest trading platform has told investors that cryptocurrencies should not be in their portfolio.
Hargreaves Lansdown made its statement after the lifting on October 8 of the long-standing ban on retail investors being able to access crypto exchange-traded notes (ETNs), which give traders exposure to digital tokens through the use of a regulated exchange.
The removing of the ban prompted Hargreaves Lansdown to state:
“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.
“Performance assumptions are not possible to analyse for crypto, and unlike other alternative asset classes it has no intrinsic value.”
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The Hargreaves Lansdown argument is at odds with the view of the UK government, which has promoted the ban’s removal as a breakthrough move to support the growth and competitiveness of the UK crypto industry. That move was welcomed by crypto firms in the UK.
Government-imposed changes also mean that investors can hold crypto ETNs in stocks and shares ISA accounts, which allow for tax-free investments.
But Hargreaves Lansdown has urged investors to focus less on the spectacular gains that have been recorded by Bitcoin recently and more on the risks associated with such assets. It has referred to periods of extreme losses that have been suffered by crypto assets, including Bitcoin, and the volatility of crypto markets.
Despite Hargreaves Lansdown’s stance on crypto, it has said that it recognises some traders will want to “speculate with cryptocurrency ETNs”, and so it will offer “appropriate clients” the opportunity to do so from early next year.
Divisions
The issue of whether cryptocurrencies are a worthwhile investment has led to divisions among both market watchers and market participants; with many speaking in favour of such assets while others (including billionaire investor Warren Buffett) are criticising them.
Just over a month ago, Morgan Stanley said its E-trade division was set to offer crypto trading to retail investors. And while JP Morgan’s CEO Jamie Dimon has been critical of crypto, the bank looks set to become involved with stablecoin.
