How are cryptocurrencies regulated in the UK?

Despite many governments now beginning to accept – or even embrace – crypto, there was significant pushback from authorities around the world throughout the initial surge in popularity of cryptocurrencies. The industry grew without a dedicated regulatory framework or governance from central banks or institutions, leading to well-founded worries about the lack of legal protection available to consumers holding digital assets, with the absence of regulations on exchange platforms making much of their activities beyond the remit of traditional financial law. As the UK government and the FCA (Financial Conduct Authority) continue to shift towards a more active regulatory approach to cryptocurrencies, we walk you through if – and to what extent – cryptocurrencies are now regulated in the UK.

Are cryptocurrencies regulated in the UK?

Cryptocurrencies – such as Bitcoin, Ethereum and Litecoin – are not currently subject to blanket UK financial regulations, which means that there is little legal framework for regulating or monitoring transactions conducted with cryptocurrencies. Therefore, investors have no protection for the money they have invested in them. Cryptocurrency is also not considered legal tender under UK law due to its lack of traditional 'money' characteristics, according to the Bank of England (BoE).

The few actions taken by the FCA have been to:

• Extend financial promotion restrictions to cover most crypto assets.
• Impose money laundering regulations on crypto exchange and wallet providers
• Ban the sale of crypto assets-backed Exchange Traded Notes (cETNs) and crypto derivatives to retail consumers

Are cryptocurrency exchange platforms regulated in the UK?

Back in January 2020, cryptocurrency exchange platforms were asked by the Financial Conduct Authority (FCA) to sign up to a new registration scheme. Firms that have already signed up or are in the process of signing up to this register – the Registered Cryptoasset Firms list – are legally permitted to trade in the UK, but the extent of the FCA's regulation is limited to monitoring how firms manage the risk of money laundering and counter terrorist financing.

Exchanges with FCA permission to trade in the UK

Since 10 January 2021, all UK cryptocurrency firms that have "a presence or market products in the UK, or that provide services to UK resident clients" must be registered or be in the process of registering with the FCA in order to be permitted to trade in the UK. These exchanges must comply with 'Anti-Money Laundering' and 'Combating the Finance of Terrorism' reporting, as well as customer-protection obligations. The list of cryptocurrency exchange platforms with FCA permission to trade in the UK can be found on its website's Registered Cryptoasset Firms page.

Exchanges pending FCA permission to trade in the UK

The Temporary Registration Regime, which was introduced for the firms that applied for registration before 10 January 2021 and whose applications were still being assessed, enabled those businesses to continue to trade in the UK while the FCA completes the assessment of their application.

Exchanges that do not have FCA permission to trade in the UK

Firms that are not registered with the FCA and are continuing to trade can be found in the 'Unregistered Cryptoasset Businesses' list on the FCA website. These are not legally permitted to conduct trade activity in the UK. UK customers can still access and use these companies at their own discretion, as the vast majority are based overseas and therefore do not fall within the FCA's remit, but the FCA discourages this and emphasises the lack of protection against illegal activity.

No FSCS protection

It's crucial to note that whether the company is registered with the FCA or not, investors will not have access to the Financial Services Compensation Scheme (FSCS) if their digital assets are compromised, meaning there is no reimbursement for any lost or stolen funds.

Even the cryptocurrency exchange platforms that have registered with the FCA are not covered by the FSCS.

Are other cryptoassets regulated in the UK?

Even though cryptocurrencies themselves like Bitcoin are not regulated, some types of cryptoassets – such as security tokens, which fall within the FCA's regulatory remit – may be, if the firm is registered with the FCA.

Security tokens are cryptoassets that provide rights, such as:

• An ownership position
• Repayment of a specific sum of money
• Entitlement to a share in future profits

You should check the Financial Services Register to find out whether a cryptocurrency firm is authorised to facilitate any of the above activities, as these may be protected by the FSCS as long as the company is registered with the FCA.

As the FCA's steady approach to cryptoasset regulation continues, you should expect the list of what is regulated to grow and potentially include stablecoins in the near future.

FCA advice on what to do before investing in cryptocurrencies:

Step 1:

Check if the exchange platform you are considering purchasing your cryptocurrency from is on the Financial Services Register.

Step 2:

If it is not on the Financial Services Register, enquire directly if it is permitted to carry out business without being registered with the FCA.

Step 3:

If it is not permitted to carry out business, the FCA suggests withdrawing your cryptoassets and/or money, as the firm is now operating illegally.

List of cryptocurrency exchange platforms with FCA permission to trade in the UK:

Here is a list some of the full company names of the cryptocurrency exchange platforms with FCA permission to trade in the UK:

• Gemini Payments UK, LTD
• Zumo Financial Services Limited
• GEMINI INTERGALACTIC UK, LTD
• ICONOMI LTD
• Fidelity Digital Assets, LTD.
• Bitpanda Custody Ltd
• CoinJar UK Limited
• Uphold Europe Limited
• Paypal UK Ltd
• Interactive Brokers (U.K.) Limited
• eToro (UK) Ltd
• Paysafe Financial Services Limited
• Revolut Ltd
• CB Payments Ltd
• Crypto Facilities Ltd
• Genesis Custody Limited

You can find the full official list of the firms with full registration on the FCA website.

Is cryptocurrency taxable in the UK?

Yes, cryptocurrency is subject to tax in the UK. Anyone who lives in the UK and holds crypto assets – such as Bitcoin or other cryptocurrencies – is taxed on the profits they make from them, but only when they exceed the annual tax-free allowance. These profits (or 'gains') must be recorded and reported to HMRC as part of an individual's self-assessment tax return. The tax-free allowance, and the amount of tax you must pay, differs depending on which type of tax HMRC decides applies to you.

Capital Gains Tax on cryptocurrency explained

The tax which most investors have to pay on cryptocurrency is Capital Gains Tax (CGT), and is calculated as a percentage of the difference between the price you acquired your cryptocurrency for and how much you sold it for, i.e. the profit you make from trading it.

You only need to pay CGT on your cryptocurrency holdings if your overall gains exceed the annual tax-free allowance, which is £3,000 for the 2025/26 tax year. If your gains remain below this threshold, you will not be liable to pay any CGT at all. This also means that if you do not actively trade any cryptocurrency, you will not need to pay CGT, as it only applies to your gains, not your holdings themselves.

For example, if you were to purchase £5,000 worth of Bitcoin and not conduct any transactions with it over the course of the tax year, you would not need to pay any CGT.  However, if you purchased £10,000 worth of Bitcoin and sold it at a later date for £30,000 (amounting to £20,000 in gains), you would be liable to pay CGT on the amount of your gains which exceed the tax-free allowance. Therefore, although the first £3,000 of your gains is tax-free, you would have to pay CGT on the remaining £17,000 you profited above this threshold.

The amount of CGT that you pay is different depending on which tax bracket you fall under.

You can read more in our article 'Crypto Capital Gains Tax explained: How to maximise your returns'.

What new regulations are coming to the crypto market?

New legislation will bring cryptoassets under existing financial regulation from October 2027. The new law will mean the safeguards applied to other investment products will be expanded to include crypto, rather than legislating a new set of regulations specifically for the crypto industry. Once it comes into effect, the legislation will require crypto companies to meet the set of standards overseen by the FCA for the first time.

The UK government has long sought to increase the regulation on crypto markets to bring them in line with traditional financial products such as stocks and shares. The changes should provide more protection for consumers and investors in the first instance, but will also serve to shift the wider perspective of the crypto industry by making it more transparent and easier to crack down on for regulators. The FCA should be able to impose sanctions and generally hold crypto platforms to account in what is currently a mostly unregulated industry.

Once the new legislation brings crypto under the FCA's purview, it will introduce new rules specifically designed for the sector, expected to target trading and market abuse, custody and issuance. The Bank of England is also expected to move forward with proposals for regulating stablecoins – a type of cryptocurrency usually tied to a fiat currency – with rules finalised by the end of 2026.

More on cryptocurrencies

For more information on what cryptocurrency is and how it works, check out our beginner's guide, and make sure to find out what a crypto wallet is and how to mine cryptocurrency. You should also read our step-by-step guide on how to buy Bitcoin. Finally, make sure you are aware of the risks. Crypto-assets are highly volatile and there is little or no financial protection if things go wrong. Investing in crypto-assets is suited to sophisticated investors who understand the associated risks and are prepared to lose all the money they invest if they buy crypto-assets.