Frequently asked questions
Why not buy Bitcoin directly?
Buying Bitcoin directly is a good option for many investors. Set up an account with
Binance or another crypto exchange and put your money in. It is very straightforward. But you need to plan for Capital Gains tax if you do.
For example, significant growth over the past year would mean that someone investing £10,000 directly in Bitcoin last November would have seen profits of around £20,000 to the end of March 2021. If our investor had decided to cash out at that point and was a basic or higher rate tax payer, he would have been asked to hand over £2,000 or £4,000 from their profit to HMRC.
When some forecasts predict price targets of £100,000 to over £500,000, this could mean a CGT hit on almost the entire amount. This is because if you are a UK tax payer, UK Capital Gains tax is due on any profit from your investments.
Do remember that past performance is no indication of future movement. In fact, some people say that Bitcoin prices must inevitably fall soon, having risen so far. Investment is a personal decision, but we suggest you always seek professional advice if you are not a professional.
What is Bitcoin?
Bitcoin is the most famous cryptocurrency in the world. Each BTC is unique and cannot be copied. Its inventor built in a limit to the way it is mined, so one day there will be no new BTC. Like any finite resource, BTC has value. In fact, many experts believe we are a long way from BTC reaching its full value, creating a significant opportunity for investment.
What is the difference between a professional and retail investor?
For the purposes of this site, the main difference is that professional investors can invest directly in derivative products, like futures, and retail investors cannot.
This means retail investors cannot bet on the future position of Bitcoin. A retail investor needs a vehicle for their investment and a taxfree ISA is the ideal longterm solution.
What is an ISA?
An ISA, or Individual Savings Account, is an effective way to build up savings tax free. Each person in the UK is entitled to save up to £20,000 in an ISA every year. The amount you can shelter from tax this way increases annually and any gains remain free of tax even when you withdraw cash. This makes them ideal for bitcoin investment which otherwise could incur 20% or 40% capital gains tax at withdrawal.
ISAs are funds managed by banks and financial institutions. Professional traders working for the bank use the money to trade on stocks, shares, currencies etc. Their goal is to increase the value of the fund, so your money grows over time. They take a fee to manage the fund for you.
What is a professional investor?
A professional investor can invest directly in derivative products, like futures. They are fully defined by the FCA here. In summary, a person (as opposed to a business or local authority) can be defined as a professional investor if they meet the following conditions.
1) the firm the investor wants to work with undertakes a qualitative assessment that shows the client understands the risks involved.
2) Two out of three of these conditions are met. (This is the quantitative test.)
- the person carries out an average of 10 sizeable transactions in the market per quarter over 4 quarters
- their financial instrument assets and portfolio exceeds 500,000EUR
- they work or have worked in financial institutions for at least one year in a professional position that requires knowledge of this transaction or service
3) a set written procedure is followed where the individual makes clear they want to be treated as a professional investor and they understand the risks, the firm warns them of these clearly i.e. no compensation scheme and no other protections from market volatility, and a contract is drawn up separately from these warnings.
Who is behind Bitcoin ISA?
As an industry insider with decades of experience, I am frustrated by the lack of opportunities for retail investors when it comes to Bitcoin.
On this site, I share my knowledge and independent research to help retail investors learn about the options available.
I analyse products on the market and share my findings, including options for investment.
If you choose a product after following a link from this site, I may receive a referral fee. However, I only refer products I genuinely believe offer the best value, service and options available at the time.
Please read this important information before making any investment.
What is $MSTR?
$MSTR is a pioneer in Bitcoin investment. Microstrategy's founder, Michael Saylor, invested $1billion of company funds in BTC earlier this year turning it into a Bitcoin vehicle. The company's stock now correlates to BTC rather than a fiat currency like USD, its stock value moves up and down with BTC.
$MSTR is important to the small private investor because it is the only foreign stock we know of that is available to add to a personal Stocks and Shares ISA.
Our research (March 2021) revealed only two providers offering $MSTR access.
Saxo's Stocks and Shares ISA gives you the option to choose an ISA invested in $MSTR at the lowest rate we could find (details correct on 22nd March 2021 - always seek independent financial advice before any investment) and Hargreaves Lansdowne, which is also reputable but with higher fees.