Telephone Numbers
Telephone Numbers
Is Cryptocurrency Legal in the United Kingdom?
For detailed information +90 542 381 3868 'Call.
The answer to this question is a definitive yes. The United Kingdom has not currently banned cryptocurrencies. Therefore, it is entirely legal to use them or conduct transactions using them.
In 2020, the United Kingdom passed a package of legal amendments aimed at regulating crypto companies. The primary goals were to prevent the use of cryptocurrencies for terrorist financing and money laundering. Furthermore, in its 2020 report, the Bank of England stated that stablecoins like USDT (cryptocurrencies pegged to fiat currency) should be regulated.
The UK's tax authority, HM Revenue and Customs (HMRC), treats cryptocurrencies as cryptoassets for tax purposes. This means that profits from the sale of cryptocurrencies are subject to Capital Gains Tax. Income derived from crypto mining or staking may be subject to Income Tax.
Therefore, while cryptocurrencies are legal in the UK, businesses must be mindful of the legal conditions surrounding their use.
Cryptocurrencies themselves are not directly regulated by the Financial Conduct Authority (FCA) in the UK. However, companies that trade in cryptocurrencies are required to register with the FCA for Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) purposes.
There are several steps to buying or exchanging this virtual asset in the UK. Consider the following steps:
Choose a Reputable Cryptocurrency Exchange or Broker
Numerous crypto exchanges exist, such as Coinbase, Binance, and others. Look for an exchange that is well-established, has a good reputation, and offers the cryptocurrencies you wish to buy or trade. Crucially, ensure that your chosen exchange or broker is registered with the FCA as required. The institution maintains a list of 'unscrupulous' providers to be aware of.
Create an Account
After selecting an exchange, you will need to create an account. This typically requires providing personal information, such as:
A modern and convenient method is a brief automated identity verification process, where you'll need to take a selfie with a document that proves your identity.
Fund Your Account
To buy or trade cryptocurrency, you must deposit funds into your exchange account. You can usually do this via a bank transfer, debit card, or credit card, or by using another cryptoasset. This process is generally straightforward. You can fund your account from a personal or a company account.
Place an Order
Once your account is funded, you can place orders to buy or trade cryptocurrencies. Be sure to check the fees and transaction costs associated with the trade before finalizing it. This information is typically provided in information boxes before you purchase a cryptocurrency.
Keep Your Coins Secure
Currently, hot or cold wallets are used for storing crypto. Another option is to store your assets directly in a wallet provided to you by an exchange.
The simplest and cheapest option is to keep the crypto in the wallet that the exchange provides when you register for an account. However, on the other hand, these options are not always the most secure and are directly dependent on the stability of the exchange itself.
Hot wallets are user-friendly wallets that run on your usual devices and operate with an internet connection. Consequently, they are convenient to use, but if you have concerns about the security of your coins, you should consider the following method. Note that there is also a fee for wallet-to-wallet transfers.
Cold wallets are devices that are not connected to the internet, making them secure from hacking. They can be USB drives or external hard drives. The risk here is physical; if you lose the access key or the device itself is damaged, you may not be able to recover your assets.
Therefore, use the option that is most suitable for you.
Taxation: The UK tax authority, HM Revenue and Customs (HMRC), treats virtual assets as property for tax purposes. This means that profits from the sale of cryptocurrencies are subject to Capital Gains Tax. Income from crypto mining or staking may be subject to Income Tax. In 2019, HMRC published guidance on the taxation of cryptocurrencies, which provides more detail on how crypto transactions should be taxed in the UK.
It is important to remember that buying and selling cryptocurrencies in the UK can have tax implications. Although cryptocurrencies are not directly regulated in the UK, they are still subject to taxation. Income Tax may also be payable on income derived from cryptocurrencies.
It's crucial to note that all virtual assets are volatile and risky investments. You are not protected by the UK government in the event of a cash loss.
What is a crypto exchange? It is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as fiat money or other digital currencies.
We can see that a crypto exchange operates on the principle of a broker. That is, it exchanges your fiat currency for crypto, or one of these virtual assets for another crypto.
The best-known and most popular providers are Binance, Coinbase, Kraken, KuCoin, etc.
Cryptoassets themselves are not legally regulated in this country. However, the legal framework for cryptocurrency providers in the country is in effect. That is, crypto exchanges. As of January 10, 2020, all providers of such services must be registered with the FCA. This type of registration is necessary for the country to comply with the amended law on the prevention of money laundering and terrorist financing.
Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) regulations applicable to cryptocurrencies
Law enforcement in Great Britain strictly controls all business areas that are subject to anti-money laundering (AML) regulations and imposes significant fines for non-compliance.
Crypto is not considered legal tender in the UK, meaning it is not officially recognized as a form of payment for debts and obligations. However, it is legal to buy, sell, and hold cryptocurrencies in the UK.
The UK government and regulators are closely monitoring the virtual asset industry and may introduce new regulations or restrictions in the future if they deem it necessary.
In 2021, the Bank of England and HM Treasury announced plans to explore the creation of a central bank digital currency (CBDC). This would coexist alongside cash and bank deposits. This could have implications for the broader crypto industry in the UK.
Based on the information above, there is no specific regulation that directly involves cryptocurrencies or other similar assets. In our opinion, this is because the sudden introduction of legislation in this area could be negatively perceived by users and businesses. Therefore, the government is anticipating and developing gradual measures for crypto state administration.
Thus, cryptoassets are only indirectly regulated in the UK, based on the country's anti-money laundering and counter-terrorist financing legislation.
In January 2020, the FCA became the anti-money laundering and counter-terrorist financing (AML/CTF) supervisor for UK crypto businesses. This means that exchanges and custodian wallet providers must register with the FCA and comply with AML/CTF regulations. The FCA has also published guidance on the regulatory status of cryptocurrencies in the UK, which states that certain types of tokens may be subject to existing UK laws and regulations.
Cryptocurrencies are a relatively new method of payment, saving, and investment, both in the UK and around the world. Consequently, there are legal challenges related to such assets, taxation, and so on.
There is no direct regulation in the UK, but we believe this is temporary. In time, there will be a specific regulatory framework for dealing with such assets. In the meantime, they can be used freely as before. Cryptocurrencies make it convenient, fast, and relatively cheap to make transfers and use finance in a new way. Furthermore, many financial institutions have a positive attitude towards such a resource.
The risks include the taxation of cryptoassets in the UK. If you use cryptocurrencies as an investment vehicle, they are subject to income tax.
Another risk lies in this type of use. Since cryptocurrencies are volatile and not backed by governments, they do not allow owners to "hedge" against losses.
On February 1st, the UK government's website published an official statement from HM Treasury regarding virtual assets and their subsequent regulation.
"The government will set out ambitious plans to robustly regulate cryptoasset activities – providing confidence and clarity to both consumers and businesses."
"The government has unveiled ambitious plans to protect consumers and grow the economy by robustly regulating cryptoasset activities."
These announcements have been made, so both consumers and businesses should be prepared for potential changes in virtual assets.
In our view, significant changes will also affect UK cryptocurrency service providers, such as exchanges, wallet providers, etc.
On the other hand, the following statement by the Economic Secretary to the Treasury, Andrew Griffith, left positive hopes:
"We are steadfast in our commitment to grow the economy and enable technological change and innovation – and this includes cryptoasset technology.
But we must also protect consumers who are embracing this new technology – ensuring robust, transparent and fair standards."
Yes, it is completely legal to buy cryptocurrency in the UK. You can use cryptocurrency exchanges to buy cryptocurrencies quickly, securely, and profitably.
Yes, investing in cryptoassets is also entirely legal in the UK. The principles of investment are quite similar to investing in securities. However, it is worth noting that income from crypto is subject to taxation in the UK.
No, it is not illegal to invest in cryptocurrencies in the UK. You can do so freely. However, you must remember that income from cryptocurrencies is subject to income tax in this country.
Normally not, if you are using cryptocurrencies for money transfers. However, if you plan to use these assets as an investment tool, then yes. In that case, the income from investments may be taxed.
Overall, yes, cryptocurrencies are completely legal in the UK. Any person or business can use them for any purpose that does not violate the country's laws.
Therefore, you should refer to the country's AML and CFT legislation, as this is the primary law that regulates crypto in the country. You can also seek legal advice from a solicitor.
Furthermore, if you plan to use cryptocurrencies as an investment tool, you need to be aware that the income from them will be subject to income tax.
United Kingdom - There is no direct regulation in the United Kingdom, but we believe this is temporary. Therefore, over time, there will be a specific regulatory framework to deal with such assets. In the meantime, they can be used freely as before. Cryptocurrencies make it possible to transfer funds and finance transactions in a new way that is convenient, fast, and relatively inexpensive. Additionally, many financial institutions have adopted a positive attitude toward such a source.
+90 542 381 3868
+971 58 5204103