If you’re looking to jump on the cryptocurrency bandwagon – you will be joining millions of other UK investors. But, if you’re completely new to this industry – the investment process can be somewhat intimidating.

While there are a lot of reasons to invest in crypto within the UK, one of the most prominent ones would simply be the potential for rapid growth. The price of a Binance (BNB) token started at a mere $0.15, and it now trades at 1,600x that price, at $250. This constitutes an increase of over 166,500%.

During 2021, DogeCoin (DOGE) saw its price increase by more than 32,000% from $0.0024 to a high of $0.76. While these results are not typical, they can be observed in certain instances and might be worth pursuing as part of a balanced investment strategy.

To get the most out of your UK crypto investment, you’ll need to find a place to invest that offers low fees and that has the coins you want. You will also want to check out some of the tax and regulatory requirements to avoid fines and penalties.

How to Invest in Cryptocurrency UK – Quick Guide

Here’s a quick guide on how to invest in cryptocurrency in the UK at Coinbase:

  • Step 1: Open an account at Coinbase: Before you can invest in cryptocurrency, you need to open a Coinbase account. Enter some basic personal information and choose a username/password.
  • Step 2: Deposit funds: Next, you can choose one of the supported payment options and make a deposit.
  • Step 3: Search for cryptocurrency: In the search bar, enter the cryptocurrency that you want to buy. 
  • Step 4: Invest in cryptocurrency: The final step is to enter your investment amount and confirm the transaction.

If the above quickfire walkthrough is a bit too basic for your skillset, we offer a detailed explanation of how to invest in cryptocurrency in the UK further down. 

Where to Invest in Cryptocurrency in the UK

When learning how to invest in cryptocurrency in the UK, you will need to spend a bit of time researching the best Bitcoin brokers UK

Important considerations to make include the number of tokens offered by the broker, what fees you will pay, and which payment methods are accepted. Also, did you know that cryptocurrency is one of the best ways to invest $75k in the UK?

Safety and regulation are, of course, also important. In the sections below, you will find reviews of five top-rated platforms that allow you to invest in cryptocurrency in a low-cost and secure way. 

1. Binance – Large Exchange to Trade Cryptocurrency at Low Fees 

binance logoIf you’re seeking a low-cost way to trade digital assets, Binance allows you to enter buy and sell orders at just 0.10% per slide. This low commission rate covers thousands of cryptocurrency markets – so you will never be short of options. Binance also offers cryptocurrency savings accounts and a wide spectrum of advanced trading tools and features.      

However, the key issue with Binance is that the exchange is being investigated by the FCA for offering cryptocurrency investment products without the required regulatory remit. As such, the exchange can no longer facilitate UK bank transfers or directly accept debit/credit cards. The only way around this is to deposit funds via Simplex – but this will cost you up to 10% in fees.   

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

2. Crypto.com – Modern Exchange that is Fast, Regulated, And With Enhanced DeFi Opportunities

Crypto.com (CRO) is one of the best crypto staking platforms, trusted by over 80 million users internationally. On top of this, it currently offers a $50 sign-up bonus for staking. Crypto staking is offered on 21 cryptocurrencies in total, where you can receive rewards for locking up your tokens. 

There are over 250 cryptocurrencies available for trading on Crypto.com, including 20 fiat currencies. This is a large number, especially compared to Binance, which currently offers only 150 digital currencies.

It also describes itself as the fastest and most secure exchange in the world, with a 2.7 million transaction per second matching engine and 50 microsecond core latency, beating other exchanges. Its security standards include OC2 Type 1 Compliance, PCI DSS Level 1 Compliance, and the Singapore Data Protection Trust Mark. 

Crypto.com offers its own comprehensive suite of services, similar to Binance and Coinbase in this regard. This includes DeFi staking, yield farming, an NFT marketplace, metal cashback cards, a centralized exchange, educational/research resources, etc. It further offers a decentralized wallet, margin trading, and a pay-for-business ecosystem. It offers 5% cashback returns (paid in CRO) for all expenditures through its card, with no annual fees. 

The exchange stands out due to its beginner-friendly interface and ease of investment. However, Crypto.com has some negative Trustpilot reviews that can damage its reputation.  Negative complaints relate mainly to exchange fees, frozen accounts, and funds that were never reimbursed. 

3. Kraken – Longstanding Exchange With Excellent Quality of Customer Service

Kraken is a very old exchange, founded all the way back in 2011 and launched in 2013. It offers 8 fiat currencies and 222 cryptocurrencies, which is a reasonable number compared to other exchanges. It has 9 million clients (less than most major exchanges) and operates in over 190 countries.

Kraken is most well-known for future and margin trading features, though these are not available for UK investors. Investors in the UK can benefit from a minimum upfront investment of just $10 through Kraken. 

Like Crypto.com, Kraken prides itself on speed and security. It has high liquidity and low processing times for execution. Its current Trustpilot rating and reviews are a little better than Crypto.com, but not by much. It does offer 24/7 customer service across multiple social channels and the KYC setup process on Kraken is easy and streamlined, completed in minutes. 

Kraken is useful for those looking to invest in niche tokens (AXS, Mango, Moonbeam). It charges a 1.5% fee for purchasing a cryptocurrency with a stablecoin (USDT, USDC, etc). This is significantly lower than the 3.99% charged by the Coinbase Exchange. Moreover, there are no account inactivity or maintenance charges. Maker and taker fees on the Pro trading Exchange are 0.16% – 0.26%, which is pretty much the industry standard. 

Deposit fees range from $0 – $21 (depending on deposit type) while withdrawal costs range from $1.95 – $35 (depending on withdrawal type). Crypto deposits and withdrawals are usually free, though it depends on the crypto in question.

4. Coinbase – Good Cryptocurrency Exchange for Beginners     

coinbase logoIf you’re looking at where to invest in cryptocurrency in the UK as a complete novice – Coinbase offers a simple yet powerful trading platform. All you need to do to get started is open an account and upload some ID for verification purposes, and you can get started with one of the best UK crypto exchanges.  

coinbase platform screenshot

Then, you can invest in dozens of cryptocurrencies via a debit or credit card payment. Coinbase will, however, charge you 3.99% in fees. If you are happy to wait a few days for the payment to arrive, you can deposit funds via a UK bank transfer for free. On arrival, you will be charged a commission of 1.49% to invest in cryptocurrency. 

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

How to Invest in Cryptocurrency UK – Tutorial

In this section of our guide on how to invest in cryptocurrency in the UK, we are going to walk you through the process step-by-step. 

Step 1: Choose a Broker

The first step is to choose a cryptocurrency broker you wish to invest with. Our guide has reviewed a list of the top crypto exchanges in the UK. 

Step 2: Create an Account

Visit the website of the particular broker you have chosen, and enter your personal details to create a new account. 

Step 3: Verify Your Identity 

Some crypto exchanges require investors to verify their identity before they can start trading. Upload the necessary documentation such as your passport copy or driver’s license to complete the verification process. 

Step 4: Deposit your Funds

After the account is verified, you can choose one of the supported payment options on the exchange, and make a deposit. 

Step 5: Search and Buy Cryptos 

Type the name of the crypto you wish to trade in the search bar. Enter the transaction amount, and confirm your purchase. One of the top crypto exchanges to start investing with is Coinbase – which offers hundreds of tradabale cryptos and is used by over 100 million people.

Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.

How We Picked the Best Crypto Brokers and Exchanges 

The criteria below should give you some indication of the decision-making process that went into making the list above. It’s important to remember that the most appropriate exchange will depend on your individual circumstances, so make sure to do your own research and to clearly identify what you are looking for. 

Security

Security is one of the most relevant criteria in terms of UK crypto investment. It’s worth remembering that all major exchanges have been hacked at some stage – this includes Coinbase, Binance, and Crypto.com

Ideally, exchanges will follow the new cryptocurrency security standard (CCSS), to augment other standards like PCI DSS and ISO 27001. Exchanges should engage in cold storage (cryptocurrency that is held offline as opposed to online) and have verified proof of reserves. This means the exchange has enough reserves to survive an adverse situation. 

The Federal Deposit Insurance Corporation (FDIC) is recommended when it comes to reviewing exchanges. This means that in the event of an account breach, cash deposits are insured up to $250,00 per account, and all regulated exchanges should have this insurance for deposits. 

Crypto deposits are not covered by FDIC, but stablecoin insurance might be a possibility in the near future. Even without FDIC insurance, exchanges should have insurance on cold storage (crypto) deposits. 

Supported Assets

The greater the number of support assets, the better. Major exchanges should provide at least 150 cryptocurrencies to UK investors. We also looked at exchanges that might have had more niche tokens, as these often had the potential to appreciate value more if they were trending or popularized. 

As previously noted, Kraken is useful for such niche tokens that may not be found on other exchanges. Major cryptocurrencies (BTC, XRP, LTC) are to be expected when it comes to these exchanges. 

There is a difference between cryptocurrencies for buying/selling, and crypto trading pairs. A trading pair has two components – such as BTC/ETH or BCH/LTC. Buying or selling directly simply means you are buying with fiat currency. So an exchange might have 1,500 trading pairs but only 200 or so crypto assets. This information is important to people who are looking for specific trading pairs. 

When researching the best exchange to use in the UK, it’s important to ensure it has the specific assets that you are looking for – this might include assets you want to transact outside of crypto, depending on your investment goals and expectations.

Customer Support

Customer support is a major feature in terms of selecting the best exchanges. But the crypto industry is now well known for high levels of customer support. So even the better exchanges typically only get rated about 3 stars on many review sites – often lower. Trustpilot is an excellent resource for unbiased reviews, directly from customers.  

We also looked at how many channels were open among major social media platforms – Twitter, Facebook, WhatsApp, Telegram, etc. Most commonly, customer support was conducted via an email ticketing system. Some customers can be waiting for weeks or months without hearing a response. If there is a trend of this happening with an exchange, it is a poor indicator in terms of customer service. 

In contrast, friendly and reachable customer service representatives that resolve issues promptly is an excellent sign. There is also something of a negative bias when it comes to support – customers have a tendency to immediately post a negative review if something goes wrong, but are much slower to write a positive review, if at all. 

Fees

Fees are one of the main concerns when it comes to crypto investment within the UK. It’s one of the deciding factors that really affects everybody, regardless of their preferences – who would want to pay more?

However, points can also be earned for the transparency of fees. Some exchanges can have confusing fee structures or hidden fees. Withdrawal and deposit fees also had to be taken into account. 

Trading vs Non Trading Fees

Something that might confuse newcomers to the crypto investment market is the difference between trading and non-trading fees. Most exchanges have a basic exchange and a Pro trading exchange.

The fees for pro trading usually ranges from 0.05% – 0.25%. It is much smaller and you are dealing here with large traders and bigger volumes. These are “maker” and “taker” fees, also known as the market spread. 

Coinbase maker and taker fees start a little higher, at 0.40% – 0.60%. These fees typically get smaller the more you trade, in a tiered system. If you trade more than $100,000 on Coinbase, maker and taker fees will be 0.10% – 0.20%. For the basic buying and selling functionality on exchanges, the fees will be far higher, often between 1 – 4%. 

Aside from these fees, the main non trading fees include conversion fees, withdrawal/deposit fees, and inactivity fees. 

  • Conversion fees – The fee to convert one asset (e.g. BTC) into another (e.g. USD). Conversion fees are nearly always charged by exchanges. 
  • Deposit/Withdrawal fees – The fee for either depositing or withdrawing crypto or fiat into an account. These fees typically depend on the payment method. Withdrawal/deposit fees can be avoided on many platforms, but you will still have to pay the crypto network fee, and there will likely be minimum limits. 
  • Inactivity Fees – Some exchanges might charge a small fee for inactivity. 

Fees are a big concern for market newcomers, and can make a distinct impact on overall Return on Investment (ROI). So be mindful when you purchase with fiat currency and also when you trade one crypto for another – there is invariably going to be a conversion fee. But these can be quite low.

Crypto Wallets

The utility and security of a crypto wallet is a core aspect of crypto investment – an unsafe wallet can mean you lose your funds, while a top quality crypto wallet will ensure you keep them. 

Without a good user interface, it’s easy to send your funds to the wrong wallet address, or send too much/little in terms of transaction fees. Some wallets will have a tiny font for the transaction fee – which have been as high as $100, in terms of Ethereum. This is an incredibly poor design feature that can result in delayed, lost or exorbitant transactions. 

Other exchanges like Crypto.com offer decentralized wallets as well as centralized wallets, which is a useful addition to have. Many industry enthusiasts will appreciate this feature, decentralization being a core feature for this space. 

Are Cold or Hot Wallets Better for Crypto Storage?

Generally, “cold” wallets are best for crypto storage. A cold wallet is one that is not connected to the internet, making it much more difficult for an attacker to gain access. A hot wallet, in contrast, is one you can access online. This makes it much more vulnerable to attackers, who are gaining in sophistication and ingenuity. Exchange wallets are hot wallets, but they often keep their reserves in cold storage.  

Despite much endorsement of cold wallets, they are not invulnerable. After an attack on the Atomic wallet (a cold wallet), one individual lost $35 million. Users are still advised to use hardware wallets like the Ledger and Trezor where possible for secure long term storage,  as they are technically safer, but no mechanism is 100% foolproof.  

Most exchanges will heavily encourage (or even mandate) Two Factor Authentication (2FA) on wallet transactions. Binance does this at multiple stages (when logging into the site and when making a transaction). This is done either through an SMS, email, or the Google 2FA Authenticator application.  

Due to sim card swapping, exchanges generally recommend using an authentication application as opposed to SMS based 2FA. 

Payment Methods 

Modern customers want to be able to withdraw and deposit quickly and without any major costs, so we choose exchanges that have little to no withdrawal and deposit fees, though this would depend on the method of withdrawal/deposit. 

A wide range of payment methods is clearly preferable to a more narrow range – if you can’t connect to your payment provider, you may not be able to make the purchase. In recent years, the number of withdrawal and deposit methods has improved considerably. 

This includes direct crypto deposits, which are available on practically all exchanges, without having to purchase the crypto from the exchange. As this is a UK crypto exchange review, BACs was preferred as a payment method compared to other methods. 

Popular payment methods and providers we looked for included:

  • Advcash
  • Western Union
  • Wise
  • Faster Payment System
  • Direct bank transfer (ACH, SEPA, BACs)
  • International transfer (SWIFT)
  • Debit card
  • Credit card 

For P2P trading, Binance has a total of 54 payment methods available at the present time. 

Cryptocurrency Investment Explained

It goes without saying that all investment products carry an element of risk. However, the risks involved when investing in digital currencies are much higher in comparison to traditional assets – such as stocks or index funds. 

Therefore, it is wise to do some research on this marketplace when learning how to invest in cryptocurrency UK. The first thing to note is that there are more than 17,000 digital tokens available to buy, sell, and trade. 

Once you have decided on a cryptocurrency you like, you will then be required to complete your purchase with an online exchange or broker. You don’t need to buy a full cryptocurrency token – as the likes of Bitcoin and Ethereum can be broken down into smaller units. 

An Overview of the UK Crypto Market & Regulations

A favorable economic and technological environment has contributed to the dominance of the UK in terms of crypto fintech services, second only to the US. The number of Web3 and fintech startups help to make crypto accessible to the masses. In comparison to less developed countries, there is no shortage of options when it comes to crypto service providers.

In the UK, cryptocurrencies are described as crypto assets (not legal tender) and managed by a Crypto Assets Task Force, created in 2018. This group was formed to assist the appropriate regulatory authorities – The Treasury, the Financial Conduct Authority, and the Bank of England – to manage the new asset class. 

Ultimately, however, it is the FCA that is really responsible for UK crypto regulation, having formulated an official “Guidance on Cryptocurrency” document for investors to look at in 2019. 

Under the guide, there are 4 types of crypto assets:

  • E-Money – Falls within the purview of the Electronic Money Regulations (EMRs). Refers to digital representations of fiat currency.
  • Utility tokens – Used to acquire access to services powered by blockchain technology.
  • Security tokens – Represents tokenized financial securities such as equity or debt-financing products. They are subject to regulation under the Regulated Activities Order (RAO).
  • Exchange tokensTokens used primarily as a means of payment (BTC, LTC, XMR, etc).They do not confer the rights or access offered by security or utility tokens

Utility and exchange tokens are technically unregulated under UK law, but there the government has promised robust crypto regulation moving forward, with draft regulations already in place. 

The FCA can freeze suspicious transactions and has more authority to move legal matters forward. In the UK, crypto derivatives are prohibited to retail customers, as they are high risk. The relevant UK tax authority for financial reporting is the HM Revenue and Customs (HMRC). 

Benefits of Cryptocurrency Investing 

If you’re still not sure if digital assets are right for your investment objectives and risk tolerance, below we explore some of the core benefits of this marketplace. 

Above-Average Market Returns 

Over the course of the past decade, Bitcoin has gone from a digital token worth less than $100  to a peak of $69,000 per token. Bitcoin isn’t alone in this parabolic increase. The likes of Shiba Inu, Solana, Dogecoin, and many others have seen unprecedented gains over the previous 12 months. In comparison, the FTSE 100 has grown by just 1% in 2022.

More recently, BAD token has surged 1,000% in July 2023, similar to LUCK token which surged 1,000% in just 24 hours.

The PEPE token even earned one trader a 5,000,000% ROI, though it is unknown if  this trader was able to cash out the full amount, for liquidity reasons.

These above average returns do come with increased volatility. Yet this volatility can be countered by investing in a diversified portfolio with lots of cryptos, and also by looking at other asset classes to balance it out. It’s also important only to invest what you can afford – if you can stay in the market for longer, you have a better chance of making a profit.

Decentralized and Finite 

Many cryptocurrencies are decentralized – meaning that no single person or authority controls the network. Moreover, digital assets like Bitcoin have a finite supply – so once BTC hits 21 million tokens, no more will enter circulation. 

If your chosen cryptocurrency is decentralized, this also means that its supply cannot be controlled or manipulated. This is in stark contrast to traditional currencies like the US dollar – which are printed out of thin air and thus – suffer from inflation. 

In 2020, the US Federal Reserve printed more than $3 trillion dollars. This was presumed necessary to deal with the Covid-19 crisis. Unfortunately, this can come with severe consequences, the chief one being inflation. 

The UK is experiencing a cost of living crisis, and banking policies are in question – printing money increases the cost of practically all assets, making it harder for people to live, due to decisions made by a centralized agency. Cryptocurrency, in contrast, is designed to be decentralized and (often) deflationary. As more currency is printed, crypto should appreciate while fiat currencies depreciate, all else remaining equal. 

Easy to Enter and Exit the Market 

There is often a misconception that buying and selling digital assets in the UK is a complex process. However, this isn’t the case at all – as it takes minutes to invest in cryptocurrencies with a debit/credit card or e-wallet in the UK. 

More importantly, the cryptocurrency market collectively is worth over a trillion dollars, so there is plenty of liquidity on offer. This means that at any time throughout the day, you can cash out your cryptocurrencies back to dollars with ease. 

As long as you comply with KYC procedures, it can be very quick to convert your crypto to cash and withdraw it to your bank account. This can often be done near-instantaneously with Faster Payments in the UK, provided this is supported by the exchange in question. 

Technology Solves Real Problems 

The underlying technology that backs cryptocurrencies like Bitcoin and Ethereum is known as the blockchain. This allows data to be sent, received, and stored in a secure and immutable manner. Moreover, many blockchain projects solve real-world problems.  

For example, Ripple allows banks to transfer money internationally in a fast and low-cost manner – irrespective of which currencies are being used. Similarly, Ethereum allows users to transact in a trustless manner via smart contract technology. 

There are blockchain projects aims to democratize and enhance practically all industries, such as banking (Stellar, Ripple), healthcare (Akiri, Coral Health), the environment (Power Ledger, Ecoterra), supply chain logistics (Vechain, CargoCoin), and more. 

Blockchain is essentially a new database system that improves the way information is sent and received, so it is relevant to all industries. It has a lot of applications aside from money transfer, though this is still a prime use case.

Earn Interest 

Many inexperienced traders are surprised to learn that you can earn interest when you invest in cryptocurrency in the UK. This is because your crypto assets will be used to fund loans – with the end borrower paying interest while the agreement is in place. 

Moreover, depending on the platform and respective digital token, interest rates on cryptocurrency savings accounts can be highly attractive. For example, at Binance, you can earn an APY of 11% for locking away your Polkadot tokens for 30 days. This is the upper end of what you can expect, and it’s a good reward for idle tokens. While you might hear of higher APY rates, these are offered by tokens that do not have Polkadots market capitalization or user traffic. Most other top coins (Solana, Algorand) offer returns in the region of 5% –  7% or lower. 

This can be contrasted to the interest traditionally gained in a savings account – currently you pay to store your funds with a bank, and can even be hit with incorrect fees and charges. Through crypto staking, you receive payments in the form of tokens, though you can’t use your tokens while they are staked. 

There are also more advanced mechanisms including yield farming and derivative staking, but they can come with additional risk. Plus, the rewards offered by regular staking should be more than enough for market newcomers. 

Cryptoassets are highly volatile and past performance isn’t an indicator of future success. Invest at your own risk.

Investing in Cryptocurrency vs Trading Cryptocurrency 

The way in which you approach the cryptocurrency industry can come in the form of investing or trading. Although the two terms are often used interchangeably, they actually refer to different strategies. 

Investing in Cryptocurrency 

When you invest in cryptocurrency in the UK, as opposed to trading, this means that you are buying digital assets as part of a longer-term strategy. Typically, long-term cryptocurrency investors will hold onto their tokens for at least one year. 

However, the longer you hold onto your chosen cryptocurrencies, the better chance you have of riding out volatile pricing waves. This is no different from investing in traditional stocks and shares – with the general consensus being that holding for no less than five years is wise. 

HODLing is More Than Just Investing

HODL could be deemed a variant of the long term investment strategy, with investors holding through thick and thin, for years on end. HODL is an acronym that stands for “hold on for dear life”. 

This is in reference to the sheer volatility of the cryptocurrency industry, more specifically to BTC. The coin endured many attacks from mainstream investors and politicians before cementing its place at the head of a completely new asset class – cryptocurrencies. 

It went through its fair share of ups and downs, including fork splits and community in-fighting, which amplified its price volatility. But only those who were able to hold on during periods of sharp volatility could benefit from its price appreciation – many early investors sold to make ends meet, which is understandable.

When you invest in cryptocurrency in the UK on a long-term basis, it’s important that your tokens are kept safe. As we discuss in more detail shortly. 

Trading Cryptocurrency 

On the other hand, if you trade cryptocurrency, as opposed to investing, you are taking part in a shorter-term strategy. 

  • Day traders, for example, will buy a cryptocurrency and sell their position before the end of the day. 
  • Swing traders take a slightly longer-term approach, albeit, positions can remain open for anywhere between a few days to several weeks. 

By trading cryptocurrency, you can take advantage of pricing swings by attempting to time the market. However, if you’re a complete novice in this industry – it’s best to invest in cryptocurrency over a longer period. 

How is Crypto Taxed in the UK?

Crypto taxes in the UK are similar to the US and other regions. When you make a profit from cryptocurrency, you will pay Capital Gains Tax (CGT). This means that whenever you sell your crypto on an exchange or use it to purchase something, whether that’s a plane ticket or a cup of coffee, it’s regarded as a taxable event. 

Put simply, if you were to sell a crypto asset, such as BTC for $30,000, and sell it later for $45,000, then you are liable for $15,000 in CGT. This is a crypto-to-crypto taxable event. If you were to sell the same BTC ($30,000) for ETH ($45,000) a number of months later, you would also owe $15,000 in CGT. This is a crypto-to-crypto taxable event. Finally, if you were to use your BTC to pay for a car worth $50,000, you would owe $20,000 in this crypto-to-service.

The bottom line is that any time your crypto appreciates in value and you cash out in some manner, you owe taxes on it. However, the UK has a high CGT exemption of $12,600 (~$16,000). So any gains you make underneath this figure are offset. Above this, you’ll pay 10% at the basic rate and 20% at the higher rate for UK crypto taxes. Unfortunately, this figure is dropping to $6,000 in 2024.  

Crypto Taxes Are Hard to Comply With

Existing UK crypto taxes have been criticized as overly complex and difficult to comply with. An individual that has been using the Binance card for the past 5 years for everyday expenses is going to have a nightmare accounting for all transactions. These cards can be backed by many different cryptos (such as BNB, SOL, DOT, BTC), and it’s possible to change the order or preference in terms of which crypto is debited for a given transaction. Often, a combination of cryptos is used if you don’t have enough in one crypto to finalize the transaction. 

For each transaction, the original purchase price would have to be referenced, alongside the selling price, for each crypto. Traders face a similar situation, potentially having traded cryptos on many platforms on exchanges for years before any regulation was set in place – this is without mentioning staking rewards, airdrops, and other transactions that add to the complexity.

If you receive compensation from labor in the form of crypto, then it will be subject to the same rate of UK taxation. You might get paid $1,000 weekly or $4,000 monthly in a crypto equivalent. So your $48,000 in crypto would be taxed identically to $48,000 in fiat – with the added caveat that you would still have to account for CGT if you paid for items using your crypto or if you sold it for fiat. 

Staking and mining cryptocurrency is likely to be treated as a means of income under UK crypto regulation but can be classified differently depending on whether its’ a hobby or a business. This is similar to the US regulatory framework. Holding crypto, sending from one wallet to another, and giving a gift to another person are not taxable events. 

How to Invest in Cryptocurrency Safely 

You might be aware of some horror stories from the cryptocurrency industry. 

Examples include exchange and wallet hacks, malware, viruses, and even extortion – all of which is associated with the theft of cryptocurrency tokens that can then be laundered in the open marketplace. 

As a result, it is absolutely crucial that you learn how to invest in cryptocurrency in the UK safely.  

Below we offer some safety-related tips that will ensure your cryptocurrency funds stay secure at all times. 

Regulated Brokers 

First and foremost, the most effective way of staying safe when investing in cryptocurrency in the UK is to ensure that you only use a regulated broker or exchange. In fact, as a UK resident, it’s wise to only use platforms that are regulated by the FCA.

Although cryptocurrency as an investment product itself is unregulated, using an FCA-licensed platform will ensure that the provider is both legitimate and credible. Moreover, the platform will be required to keep your crypto assets safe at all times. 

With that being said, the vast majority of cryptocurrency trading sites are actually unregulated. They bypass conventional regulations by only offering cryptocurrency deposits and withdrawals – or partnering with a third-party processor for GBP payments. 

Wallet Security 

If you invest in cryptocurrency UK and subsequently decide to withdraw your tokens out of the respective broker or exchange – you need to have a firm understanding of wallet security. 

Crucially, if somebody is able to hack your device and gain entry to your wallet, they will be able to withdraw your entire cryptocurrency balance in one fell swoop. 

Bankroll Management

One of the best ways to safely invest in crypto is to simply be mindful of what you can afford to lose. If you only earn a set amount of money, then there is only so much you can afford to invest. There is nothing wrong with investing smaller amounts and testing the waters to see what works and what doesn’t. Demo accounts are available on many trading platforms. 

Professional traders also make use of stop losses, to prevent how much they can lose, and exit losing trades as quickly as possible (depending on the type of trade in question). It’s also a common rule of thumb not to invest more than 5% of your overall investment capital in one trade or investment, with some recommending this percentage should be reduced. This rule applies equally to investment and trading. 

How to Use Stop-Loss and Take-Profit Strategies

Many traders depend on stop-loss and take-profit levels to formulate their trading strategies, based on their risk tolerance. These crucial thresholds are used in both traditional and crypto markets. The basic premise is that you will automatically stop your trading losses or lock in your profits at specific intervals. 

You might, for example, want to lock in your profit when BTC hits $31,000 or stop losses when it hits $29,000. This is inline with investing theory which runs on specific charting patterns. For example, Bitcoin currently has a support level of $28,500 and a resistance level of $32,500, as per some analysts.

The asset can reach these levels and then move in the opposite direction. So you might want to lock in profits before a reversal, or prevent losses before the price slides all the way down to the support level.  

So by all means set aside a small amount and invest it in your crypto of choice through a regulated exchange, but don’t be fooled by exorbitant claims. If you don’t learn to master what you can spend now, you will take the same psychology with you if you do happen to earn more money. When you make money you have to manage and spend it wisely.

Cryptoassets are highly volatile and past performance isn’t an indicator of future success. Invest at your own risk.

Risks of UK Crypto Investment 

Cryptocurrency is a notoriously volatile asset class and there are dangers to be made aware of, aside from price swings. The following items should serve to assist you with preserving your crypto investment so it can grow with time. 

Volatility

Volatility is a prominent characteristic of the cryptocurrency market, often regarded as one of its defining features. It refers to the rapid and substantial price fluctuations exhibited by various cryptocurrencies. Recently, a New York District Court has deemed that the sale of Ripple (XRP) was not a security.

The XRP token soared 61% after the news broke. In the same week, Coinbase rose 34%.The ruling has positive implications for the wider market, as previously there was a lack of legal clarity on these offerings. Aside from this demonstration, there are multiple reasons for the high levels of volatility associated with the crypto markets. 

Firstly, the relatively young and evolving nature of the crypto industry contributes to its volatility. The market lacks the long-established stability and maturity seen in traditional financial markets. As a result, it is more susceptible to sudden changes in investor sentiment, market speculation, and regulatory developments. News events, such as government regulations or statements from prominent figures, can trigger significant price swings. 

Additionally, the decentralized and global nature of cryptocurrencies contributes to increased volatility. The absence of a centralized authority or regulatory body, coupled with the ease of access to trading platforms, allows for rapid and widespread trading activity. This heightened liquidity can lead to sharp price movements. 

Plus, the limited market capitalization of many cryptocurrencies compared to traditional assets increases their price volatility. With smaller market sizes, it takes relatively small buy/sell orders to impact prices significantly. This liquidity imbalance can lead to dramatic price fluctuations, both upwards and downwards.

Market Manipulation

Market manipulation in the cryptocurrency realm refers to the deliberate actions of individuals or groups to manipulate the price or trading volume of a particular cryptocurrency for personal gain. The decentralized and largely unregulated nature of the cryptocurrency markets makes them susceptible to various forms of manipulation.

The Pump And Dump Vs Rug Pull 

One common tactic in crypto fraud is known as the Pump and Dump scheme , where a group artificially inflates the price of a cryptocurrency through coordinated buying, creating a buying frenzy among unsuspecting investors. Once the price has risen significantly, the manipulators sell their holdings, causing the price to plummet and leaving others with losses.

The rug pull is similar, except for the fact that a core team creates a token with the intent of duping investors and running off with the money. The rug pull involves a token the core team creates, while the pump and dump can be done with any token, as long as individuals can be manipulated to drive the price upwards.

Another form of manipulation involves spreading false information or rumors to manipulate market sentiment. This can include fake news about partnerships, regulatory developments, or technological advancements related to a cryptocurrency. By creating a false narrative, manipulators can induce investors to buy or sell based on inaccurate information, leading to price manipulation.

Wash trading is yet another manipulation technique wherein individuals trade with themselves or collude with others to create false trading activity and volume. This artificially increases the appearance of liquidity and can mislead other traders into making decisions based on false signals.

Market manipulation not only undermines the integrity of the cryptocurrency markets but also poses significant risks to investors. It can lead to financial losses and erode trust in the industry as a whole. Regulators and exchanges are continuously working to detect and prevent such manipulation through increased surveillance, regulations, and stricter enforcement measures.

Regulation

Regulation in the crypto industry has been a topic of increasing importance as cryptocurrencies continue to gain prominence. Governments and regulatory bodies worldwide are grappling with the need to strike a balance between fostering innovation and protecting investors and consumers.

Regulatory approaches towards cryptocurrencies vary across jurisdictions. Some countries have embraced cryptocurrencies and blockchain technology, enacting specific legislation to provide clarity and legal frameworks for their use. These regulations often focus on aspects such as Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, taxation, and licensing requirements for crypto businesses.

The issue is that regulation can have an adverse impact on the crypto industry. An exchange that you are working with might be sued by a regulatory agency, as is the case of Coinbase and Binance who are defending lawsuits against the SEC. Certain coins can be banned on exchanges or in specific jurisdictions (such as privacy coins in South Korea and Japan). 

One of the possible reasons that exchanges have been getting poor online reviews is due to frozen accounts due to suspicious transactions. They are forced to comply if certain parameters are met, and these are due to AML/KYC procedures, handed to them by regulatory authorities. 

Hacks and Scams

Hacks and scams in the cryptocurrency industry are unfortunate realities that pose significant risks to participants and undermine trust in the ecosystem. Two prevalent types of incidents are exchange hacks and phishing scams, which can decimate account holders who have their funds siphoned. 

Exchange hacks involve unauthorized access to cryptocurrency exchange platforms, resulting in the theft of users’ funds. Hackers exploit vulnerabilities in exchange security systems, gaining access to private keys or wallets holding cryptocurrencies. These incidents can have severe consequences, with millions or even billions of dollars’ worth of cryptocurrencies being stolen. Such hacks not only impact the affected users but also generate fear and uncertainty within the broader crypto community.

Phishing scams are another common threat in the crypto industry. These scams involve deceptive practices where malicious actors impersonate legitimate entities, such as exchanges or wallets, to trick users into revealing their private keys, passwords, or other sensitive information. Phishing attempts often occur through fraudulent websites, emails, or social media accounts, with the intention of stealing users’ funds or gaining unauthorized access to their accounts.

Both exchange hacks and phishing scams highlight the importance of security measures and user awareness in the crypto industry. Investors can exercise caution by employing strong security practices such as enabling 2FA, using hardware wallets for storing cryptocurrencies, and carefully verifying the authenticity of websites and communications.

Insolvency

Another big risk, highlighted by the collapse of FTX in late 2022, would be that of insolvency. If a major exchange goes insolvent, it can have major implications for the rest of the industry. The collapse sent the price of BTC to a two year low, and the majority of coins all follow the price of BTC, to greater or lesser degrees.  

Aside from price declines and lowered liquidity, there is also the risk that if the exchange you are holding your funds in goes bankrupt, you won’t get your money back. Cryptocurrency is not FDIC insured. FTX holders did not get their money back, and are unlikely to receive any compensation.

This is why it is preferable to work with a reputable exchange that has significant reserves as well as full compliance with all regulatory procedures. FTX was in breach of multiple aspects of its KYC/compliance obligations Binance CEO Changpeng Zhao discussed a takeover, but backed out after seeing that the issues were too far reaching to assist with. 

Tips For Crypto Investment

Many cryptocurrencies have grown in value by a significant amount in recent years. For example, had you invested in Ethereum on January 1 2018, you would be looking at gains of over 160,000%. 

However, you also need to remember that many cryptocurrencies have since lost more than 90% in value – so the risk of loss is high. With this in mind, there are a few simple steps that you can take to ensure you mitigate risk as best as possible when you buy cryptocurrency.

1. Never Invest More Than You Can Lose

As a cryptocurrency newbie, it’s best to start off with modest stakes. This allows you to test the waters and observe what happens, without losing exorbitant amounts of capital. 

What is Fractional Investing?

Fractional investing allows you to gain a “slice” of a whole asset, such as a stock. A stock might be priced at $400,000 (as is the case of Berkshire Hathaway), but fractional investing might allow you to invest in $5 of this stock. This allows you to diversify your portfolio, even if you only have $100 or so to invest. It allows access to assets that were previously out of reach of investors. You can also invest in fractional shares of Exchange Traded Funds (ETFs), which are baskets of many stocks. 

Fractional investment is an inherent feature of cryptocurrency. You don’t have to invest in a whole BTC – you can invest in 0.0001 BTC (currently worth $3). The flexibility of crypto allows any token to be broken up into tiny fractions. However, this still does not mean it’s practical to invest tiny amounts – if you are paying for gas/transaction fees and exchange fees, a tiny investment might not be worth it. There are minimum investment amounts on most exchanges, often in the region of $10 – $50. 

A major reason why people fail in crypto investment is because they rush too quickly with too much capital – the investment fails, and they blame the entire market, instead of taking a step back and being a little more cautious. 

There is every chance that you will get back less than you originally invested – so make sure you won’t need the funds for primary living costs. This applies regardless of the potential profits of the coin in question, because you are putting yourself (and potentially any dependants) at risk if the investment does not go the way you want it to. 

2. Portfolio Diversification

It’s vitally important to diversify your portfolio when investing in the cryptocurrency space. As mentioned earlier, you’ve got over 17,000 tokens to choose from – so perhaps consider spreading your investment funds across five or even 10 different cryptocurrencies.  

Portfolio diversification is one of the most well established principles of investment. The market works in a manner that when one industry is down, another would be up (the money usually has to travel somewhere). So if you are well diversified, the theory is that you should see some of the action. 

There are different industries within Web3 that you can diversify across. This includes Layer 1 blockchains (BTC, LTC, XMR), Layer 2 blockchains (Arbitrum, Polygon) and Layer 3 blockchains (Starknet, ICO Protocol), each of which is a different kind of blockchains with different utility. This is one area you could diversify across. You can also diversify across coin functions – privacy based, renewability and sustainability, payments, real estate, etc. 

Once you have diversified your crypto portfolio, you could also consider diversifying across traditional asset classes. As a rule of thumb, the more assets you have across different sectors.  the more diversified you are. Because people will always need to invest in or purchase something, but the specifics of where they spend their currency will change. 

3. Dollar Cost Average

A great way to avoid being exposed to rapid pricing spikes is to dollar-cost average your investments. This means investing smaller but regular sums at fixed intervals. For example, instead of investing a lump sum of $1,000 – consider spreading this out over 10 monthly purchases at $100 each.

Though there is some controversy, studies have demonstrated that dollar cost averaging can be very beneficial and even beat lump sum investing. Instead of trying to figure out the best time to invest, you can ‘average’ out your investment times, meaning you will likely get an even number of good and bad investments, spread across time. One of its biggest advantages is that it severely reduces downside risk, so you have a better chance of staying in the game. 

This is a core tenet of investment – preserve your capital first, because you can’t succeed if you lose it. It’s certainly a smart investment tip for a cautious investor. 

4. Use Enhanced Tools

You can also make use of specific tools to gain an edge in crypto trading. One example would be DEXTools, which allows you to view trading pairs, assigning each pair an overall score. You can check out the liquidity, price, and volume for a given pair, and keep track of pairs to anticipate upward or downward price movements. 

Indicators like the Fear and Greed Index can be a useful tool when deciding whether or not to enter the market. It aggregates a number of data points and gives a score between 0 (extreme fear) and 100 (extreme greed). There are a number of social groups that can also alert you to the key signals and indicators, in terms of price movements. 

DefyTrends is a data analytics platform that  takes a number of data sources into account to present a figure between 0 (extremely undervalued ) and 100 (extremely overvalued). There are a number of tools like this that serve to synthesize a large amount of information and present it to new investors in an easily digestible manner. Such tools are needed given the rate of change of innovation within the world of crypto. 

Bitcoin ETF Token – New Presale Cryptocurrency Offering High Staking Yields and a Deflationary Token Supply

When investing in cryptocurrency, it is important to diversify your portfolio between large cap and small-cap cryptos. Bitcoin ETF Token ($BTCETF) is a new cryptocurrency project, that has just been launched on presale. 

Bitcoin ETF Token presale

This ERC-20 token speculates the upcoming arrival of a Bitcoin ETF. It has set 5 project milestones which will result in staking rewards and burning events. As each milestone is met, Bitcoin ETF Token will burn 5% of its 2.1 billion token supply. 

For instance, once the SEC approves the first Bitcoin ETF – Bitcoin ETF Token will burn 5% of its supply. Similarly, the same practice will follow upon the release of the ETF, and when the $BTCETF token reaches $100 million in trading volume. 

This utility token will also provide passive income to token holders through its staking mechanism. After purchasing $BTCETF, investors can stake their holdings on a smart contract – verified by Coinsult. 

At press time, Bitcoin ETF Token is offering staking APYs (Annual Percentage Yields) of more than 1,000%. As more tokens are staked, the yields will reduce. 25% of the tokens will be allocated through staking rewards. 

Bitcoin ETF Token staking

40% of the token supply has been allocated for the ongoing presale. The presale will consist of ten rounds – each allocating 84 million tokens. By the end of the presale, Bitcoin ETF Token aims to raise nearly $5 million. 

In only a few days, the presale has raised over $220K. Interested investors can buy $BTCETF for just $0.005 through the current presale round. Read the Bitcoin ETF Token whitepaper and join the Telegram channel for more information. 

Hard Cap $4.956 Million
Total Tokens 2.1 Billion
Tokens available in presale 840 Million
Blockchain Ethereum Network
Token type ERC-20
Minimum Purchase NA
Purchase with USDT, ETH, BNB, MATIC, Card

Conclusion 

This guide should contain everything you need to know to safely invest in cryptocurrency in the UK, without getting hit with undisclosed fees due to a lack of transparency. You can see the clear benefits of crypto assets, but also some of the pitfalls and trappings – volatility, regulation, hacks, scams, insolvency, and market manipulation.

One of the top crypto exchanges to start investing with is Coinbase – a global platform that has more than 100 million users.

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