Is Cryptocurrency Legal in the UK?

In recent years, the buzz around cryptocurrency has only become stronger, making it one of the most popular forms of investment right now.

But even with the increasing popularity, many still view cryptocurrency as a risky investment, considering the market volatility and many stories (some completely false) around it. This has made a few investors question the legality of cryptocurrency.

Let’s look at the legal issues around cryptocurrency and what it means to UK investors.

Can You Buy Cryptocurrency in the UK?

Yes. You can buy and sell crypto in the UK whenever you want. Some of the most popular cryptocurrencies include Bitcoin, Ethereum, Dogecoin and Litecoin. These can all be traded for potentially high returns through the best crypto exchanges in the UK.

It is legal to buy cryptocurrency through trusted exchanges like eToro. The only time you may face restrictions is when your bank doesn’t support crypto transactions.

While some financial institutions support crypto trading, a few have stringent rules forbidding users from completing transactions involving virtual assets. This makes it impossible to deposit or withdraw money from crypto exchanges via such banks.

While this can be a challenge in some way, it shouldn’t limit anyone from investing in the crypto market because you can still make and receive payments via other options. Besides, you can also complete successful transactions through crypto-friendly banks.

Is Cryptocurrency Legal in the UK?

Yes, cryptocurrency is legal in the UK. However, it should be noted that the government hasn’t recognised cryptocurrencies as an official legal tender in the country. Governments are working to properly regulate cryptoassets to give investors transparency over laws, but also make gains by taxing crypto markets.

Notably, a few household names in the UK are now accepting crypto assets like Bitcoin as payment for goods or services.

Before choosing a cryptoasset, look for background information, including its history, uses, and viability. An emerging issue around cryptocurrencies is money laundering, which has led to many regulations to guide daily transactions.

You can read more about the UK government’s stance on cryptoassets here.

Is Buying Cryptocurrency Legal in the UK?

Yes, you can buy cryptocurrency legally in the UK. All you need is a suitable crypto exchange that is regulated by the UK’s financial regulatory, the Financial Conduct Authority (FCA). Later, you can either store your asset in a cryptocurrency wallet or leave it in the exchange for future trading.

If you live in the UK, dealing with an exchange that adheres to the country’s regulations makes perfect sense. Always look for FCA-regulated platforms to stay safe when trading by avoiding problems with anti-money laundering agencies.

Choosing an FCA-regulated platform gives you a safe place to invest with clear details on where the money comes from and how it flows into and out of the exchange.

Also, you can check with the Financial Services Register to find a list of unregistered crypto exchanges you should avoid. If your bank doesn’t support crypto-related transactions, you should look for an alternative payment/withdrawal method before attempting any transaction.

Is Selling Cryptocurrency Legal in the UK?

Yes, like buying cryptocurrency, selling it is also legal in the UK. But first, find out if your bank accepts crypto transactions because that will be important when transferring funds to your bank account.

You should recall that owning cryptoassets like Bitcoin may attract a few charges depending on your investment activities. For example, according to UK regulations, selling your assets may attract an income tax.

Also, you could be liable to national insurance payments and income tax if you receive payments in Bitcoin or any form of crypto asset.

Finally, the capital gains tax applies when selling crypto assets on popular exchange platforms.

Is Buying Bitcoin Illegal in the UK?

No, buying Bitcoin is not illegal in the UK. Many people associate the crypto industry with Bitcoin because it was the first ever decentralised cryptocurrency.

It is also the most expensive cryptocurrency and will likely be your first asset when investing in the crypto market. Fortunately, buying and trading Bitcoin in the UK is legal. But again, make sure you know your bank’s stance on such assets before completing any transaction.

Where Can You Buy Cryptocurrency Legally in the UK?

Bitcoin ATMs were the most efficient way to buy cryptocurrency in the UK until the FCA banned them in early 2022.

Today, the legal way to purchase crypto in the UK is through crypto exchanges. Put simply, a crypto exchange is a platform that allows investors to buy or sell cryptocurrencies.

Most exchanges require personal information before verifying your identity to comply with the standard regulations. After successful registration, you can deposit funds to your account and buy the desired crypto assets.

If your bank doesn’t support crypto transactions, find out if the exchange has alternative payment methods such as credit/debit cards or e-wallets. We encourage investors to prioritize FCA-registered exchanges to complete safe transactions online.

Is Crypto Trading Legal?

Trading crypto in the UK is legal. However, beware of market volatility that makes it one of the riskiest investments. Whether trading the real asset or CFD trading, there’s always a significant risk of losing money, thanks to the unpredictable nature of the market.

This is one of the bitter truths you must understand before making an investment in crypto. But it doesn’t mean the market isn’t rewarding. Just be sure to do enough research before you get started.

What Laws Govern Cryptocurrency Exchanges?

There are no conventional laws governing cryptocurrency exchanges. However, most platforms still adhere to specific rules to function effectively in the volatile market. But these tend to vary from country to country, making it important to conduct proper research before you purchase any asset.

For example, cryptocurrency exchanges in the UK are FCA regulated to prevent money laundering schemes. This makes monitoring every investor’s activities on the platform easier and creates a safe space for everyone.

According to the latest reports, the FCA could unleash a set of financial promotion rules to guide the crypto exchanges in the future. If this is successful, exchange platforms will ensure that investors know the risk of investing in cryptocurrencies by passing a test before opening new accounts.

According to the same rules, crypto exchanges will only provide high-value products, targeting advanced investors, after confirming their risk appetite.

Which Laws Protect Cryptocurrency Investors?

Traditional products like mortgages enjoy full protection from the Financial Services Compensation Scheme. This protects up to £85,000 of the investor’s money if the platform ceases to operate. Unfortunately, such protection isn’t there for crypto investors.

That means the onus is on the investor to protect themselves from scammers and money launderers looking to pounce at the slightest opportunity. To be safe, it is advisable to stick with crypto exchanges listed on the FCA’s register.

The Advertising Standards Authority (ASA) also comes in handy when it comes to safety, with the mandate to ban misleading promotions about the crypto market.

Are Cryptocurrencies Regulated in the UK?

Nobody regulates the crypto industry. That’s attributed to their nature, which makes it difficult to regulate them throughout the world, let alone in the UK.

However, the FCA is tasked with providing useful guidelines on how investors can buy and sell crypto. This includes financial promotions and general information on who’s purchasing which asset at what time. This is in a bid to curb money laundering.

On the other hand, the Advertising Standards Authority (ASA) is responsible for banning any misleading adverts about the crypto market. Banks can also play a key role in flagging high-risk transactions.

Can the Law on Cryptocurrencies Change?

Of course, change is inevitable. And even for a volatile market like crypto, laws can always change anytime.

One of the reasons for the widespread popularity of cryptocurrencies in the UK is government support.

UK regulators have gone a step further to improve the investors’ knowledge of the crypto market, including their understanding of the potential risk of losing money.

The Treasury and Bank of England’s suggestion to create a stablecoin, if successful, would go a long way towards improving the crypto industry. But if that happens, a centralised regulatory authority would likely come in, as opposed to the pure cryptocurrencies in their current, decentralised form.

Of course, the rules can change anytime. But it’s nice to see that the UK government has been crucial to the success of the crypto industry thus far.

How Do the Anti-money Laundering Rules in the Crypto Industry Work?

Critics have always faulted cryptocurrencies for the widespread money laundering in the world, many claiming that these assets provide an easy way to trade illegal goods or even hide “dirty money.” 

While such criticism is impossible to overlook, the FCA deserves lots of praise for its attempts to tackle money laundering in the crypto industry.

Such regulations protect crypto exchanges by ensuring cryptocurrencies aren’t used for illegal transactions. Today, many crypto exchanges need new users’ details, including their email addresses and names, to store accurate records.

Has Anyone Ever Been in Trouble for Buying Bitcoin?

It is legal to own Bitcoin in the UK. So, there’s nothing to worry about as far as buying, selling, and trading Bitcoin. However, you can easily get into trouble with the authorities if you use Bitcoin for illegal reasons.

A classic example is the Silk Road shutdown in 2013 when it was discovered that the founder was operating illegal trades using crypto as payment.

Do Cryptocurrencies Follow Any Laws?

No laws govern cryptocurrencies due to their model as decentralised assets. This makes them potentially more lucrative as they don’t require a centralised authority like government banks.

However, on the downside, the absence of laws makes them just as appealing to scammers and money launderers.

But the good news is that there are rules governing the advertisement and sale of crypto in the UK. This should give a ray of hope to new investors making their first steps into the world of crypto.

What Is the Safest Way to Buy and Sell Crypto?

Market volatility has made cryptocurrencies one of the riskiest forms of investment in the UK. And critics will use that to discourage people from investing in cryptoassets, even claiming that there is no safe way to trade these assets in the UK.  

However, nothing should prevent you from investing in cryptocurrencies if you are sold on the idea of owning them. There’s nothing illegal about trading these assets, either.

One of the safest ways to buy and sell cryptocurrencies is by going through the FCA’s register to find trusted exchanges in the country. Such platforms provide a safe space to invest with little to worry about fund protection.

With the right exchange platform, you can buy, sell, and store your cryptoassets in a secure crypto wallet.

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