Crypto.com is announcing that it has been authorized as an Electronic Money Institution (EMI) by the UK’s Financial Conduct Authority (FCA). In a new announcement, the crypto exchange says that the new EMI authorization will allow it to offer a series of UK-based e-money products “as part of the robust FCA regime that aligns with Crypto.com’s […]
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Investors representing trillions of dollars in assets have published a new roadmap for fund tokenization approved by the government of the UK. In a new report, The Investment Association – a working group with over $11 trillion with assets under its management – lays out its plan to implement tokenized funds or funds with digitized […]
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Buy Bitcoin and Ether legally and securely in the U.K. and get insights on regulations, storage and investment options to make informed decisions.
To navigate the process of buying Bitcoin effectively, it is essential to explore secure options. In the United Kingdom, acquiring cryptocurrencies is legal, yet it can pose challenges, as the government underscores the need to comprehend the associated risks.
For an effective traversal of the crypto landscape, investors should follow key steps, including choosing the right crypto exchange or broker, setting up a secure wallet and making informed decisions regarding payments and orders.
This article examines how to purchase Bitcoin (BTC) and Ether (ETH) in the U.K. while offering information on legal considerations, secure storage options, cryptocurrency exchanges and brokers for effortless market navigation.
While the legal status of cryptocurrencies varies from one country to another, buying Bitcoin (BTC) and Ether (ETH) is entirely legal in the U.K., with a well-defined regulatory framework in place. Cryptocurrencies are categorized as taxable assets by His Majesty’s Revenue and Customs (HMRC), and they are subject to taxation.
Acquiring Bitcoin and Ether in the U.K. triggers the tax reporting and payment obligations associated with cryptocurrency transactions. As such, maintaining accurate records is crucial for individuals planning to purchase BTC and ETH in the United Kingdom. This ensures compliance with tax regulations for both crypto gains and crypto losses.
It’s important to note that in the U.K., cryptocurrencies are not recognized as legal tender like the British pound. This regulatory approach to cryptocurrencies helps to foster innovation and promote awareness of associated risks, creating a transparent, legal environment for buying, selling and holding Bitcoin and Ether.
In October 2023, the Financial Conduct Authority (FCA) expanded its regulatory oversight to include crypto asset promotions in the U.K., emphasizing compliance with accurate information and risk warnings. Additionally, starting in September 2023, the Travel Rule mandates that U.K.-based crypto asset businesses are required to collect, verify and share information on transfers, which impacts the pseudonymous nature of cryptocurrencies.
Despite industry engagement, some market players have exited the U.K., highlighting the importance of adhering to rules and regulations when using exchanges to buy cryptocurrencies.
Prior to delving into Bitcoin and Ether investments, it’s essential to have a secure crypto wallet, available in various forms. While leaving holdings on an exchange account is convenient for small quantities, transitioning to a more secure storage solution can be an option for those investors who want to store larger amounts of tokens.
Moreover, it’s crucial to remember that retaining funds on an exchange means lacking control over the keys and, consequently, forfeiting control over the coins, emphasizing the importance of securing private keys for the full control and ownership of digital assets.
Bitcoin wallets, including hardware, software and paper options, are used to securely manage and store Bitcoin holdings, while Ethereum wallets act as secure repositories for ETH, providing control over assets and facilitating transactions.
Cryptocurrency users rely on Bitcoin and Ether wallets to safeguard and control their digital assets, ensuring the secure management of private keys essential for accessing and managing their holdings.
Related: A beginner’s guide to filing cryptocurrency taxes in the US, UK and Germany
To reduce risk, an investor can enhance security by transferring their cryptocurrency from an exchange’s default wallet to their own cold wallet, which is not online and thus less susceptible to hacking.
It’s worth noting that these wallets don’t store investor’s cryptocurrencies per se; instead, they safeguard the private keys necessary for accessing the wallet’s address and authorizing transactions. Losing these digital keys means forfeiting access to Bitcoin and Ether holdings.
Investors need to choose a broker or cryptocurrency exchange before they can purchase cryptocurrencies. Although both enable cryptocurrency purchases in the U.K., it’s important to note some significant distinctions between them. Due to the growing possibility of hacks in the cryptocurrency space, choosing the best cryptocurrency exchange or broker can be a challenging process, with security being the main priority.
In the U.K., crypto assets and crypto exchanges operate without formal regulation, but the Financial Conduct Authority (FCA) mandates registration for crypto exchanges within the country. Notably, some crypto exchanges such as Gemini, Bitpanda, Kraken and Crypto.com are successfully registered with the FCA.
Given the extreme volatility and absence of government-backed protection for cryptocurrency investments, exercising caution and acknowledging the speculative nature of cryptocurrencies is vital, even when dealing with FCA-authorized and regulated providers. To enhance security, an investor can also diversify their digital currency holdings across multiple exchanges to mitigate the risk of a single exchange failure.
When choosing a crypto exchange, check for BTC and ETH availability, but also ensure there’s substantial daily trading volume to guarantee adequate liquidity for smooth transactions in both cryptocurrencies and fiat currency. Also, watch out for fees that can affect returns, especially for high-frequency traders, and ensure the exchange offers desired trading types such as limit orders and margins.
In response to updated regulatory guidelines from the FCA and the expanded parameters of the Regime of Financial Promotions, CEX.IO and Binance announced in 2023 that they had suspended onboarding new U.K.-based consumers. Therefore, verifying an exchange’s availability in the U.K. and compliance with regulatory changes is essential for informed decision-making.
Cryptocurrency brokers, such as interactive brokers and eToro, simplify the crypto buying process with user-friendly interfaces that interact with exchanges for investors. While some cryptocurrency brokers charge higher fees, others offer their services for free but profit by selling traders’ data or executing user trades at suboptimal market prices.
While brokers offer convenience, they may limit the transfer of cryptocurrency holdings from their trading platforms. This restriction can be a concern for investors seeking enhanced security through crypto wallets, including hardware wallets disconnected from the internet. However, brokers can restrict investors from moving their crypto holdings to external wallets.
After selecting a cryptocurrency broker or exchange, investors can sign up to open an account and fund it through options like linking a bank account or using debit or credit cards, though the latter may incur high fees.
Upon creating an account and selecting a payment method, identity verification is mandatory. For example, the submission of an identity document and proof of address is a common requirement in the United Kingdom. Investors may also encounter a crypto risk awareness quiz. Depending on the broker or exchange, there might be a wait of a few days before the deposited funds can be used to buy cryptocurrency.
After funding their account, investors can proceed to place their order for purchasing Bitcoin or Ether by entering the desired amount in pounds. The process varies by exchange; some have a straightforward “Buy” button for BTC and ETH, which prompts users to enter the desired amount.
Most exchanges enable the purchase of fractional cryptocurrency shares, making it feasible to own portions of higher-priced tokens like Bitcoin or Ethereum that would typically require significant investment.
As previously noted, cryptocurrency exchanges run the additional risk of theft or hacking and are not protected by the Financial Services Compensation Scheme of the United Kingdom. If cryptocurrency owners misplace or forget their private keys or recovery phrases, they could forfeit their entire investment.
When purchasing cryptocurrency on a crypto exchange, it is typically retained in a wallet connected to the exchange. If desired, investors can store or withdraw Bitcoin and Ether to a chosen external wallet for added security. However, investors purchasing cryptocurrency through a broker might not have much control over where it is kept.
If an investor is interested in transferring their digital currency to a securer place or doesn’t like the provider the exchange collaborates with, they may move it off the exchange and into an independent hot or cold wallet. Depending on the exchange and the total amount of a transfer, investors may be required to pay a small charge in order to accomplish this.
Crypto ATMs have been appearing in cities all over the world; however, in February 2023, the FCA imposed a ban on cryptocurrency ATMs and urged operators to shut down their machines or face enforcement actions.
The FCA warns that using these machines is risky, as they operate unlawfully and provide no protection in case of issues, and communication with operators is often challenging. The FCA aims to keep cautioning the public and taking enforcement measures against unregistered crypto ATM operators.
Exchange-traded funds (ETFs) provide diversified exposure to multiple holdings within a single investment, including cryptocurrencies like Bitcoin and Ether. Investment trusts pool investors’ funds through the sale of a set number of shares, which may have some initial trust-related challenges upon launch. This structure provides instant diversification and reduces risk compared to picking individual investments.
Investors can now access multiple cryptocurrencies simultaneously through various firms. ETF providers such as Purpose Investments and VanEck offer opportunities for investors to engage in the crypto market.
Several U.K. banking and financial apps, such as PayPal, Revolut, Skrill and MoonPay, have introduced the ability for customers to purchase Bitcoin and Ether directly on their platforms. To purchase shares in companies that are publicly listed, they will require an online account.
However, it’s worth noting that JPMorgan’s U.K. bank, Chase, took a different stance in October 2023 by prohibiting cryptocurrency transactions for its British customers due to a notable increase in fraud and scams, including fake investments and deceptive celebrity endorsements.
Additionally, payment processors, such as BitPay, can be used to buy BTC and ETH. Once connected, users can initiate transactions through the payment processor, converting fiat currency into Bitcoin or Ether.
Moreover, in the U.K., traders can utilize peer-to-peer (P2P) crypto platforms, such as Cash App and Paxful, to trade digital assets, although the government emphasizes the risks associated with these assets. P2P platforms enable direct cryptocurrency transactions between individuals and are a prevalent means of acquiring digital currencies in the United Kingdom. However, it’s important to be aware that U.K. investors have limited legal protections in the event of platform insolvency.
Nearly 50 nations including the US are collaborating to enable automatic information exchange between crypto trading firms and tax agencies. In a new press release, the government of the United Kingdom (UK) says that the coalition of jurisdictions is partnering up to create the Crypto-Asset Reporting Framework (CARF) as a means of ensuring tax compliance […]
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Police officers in the UK targeting cross-border crimes say that they have worked with US-based digital asset exchange Kraken to return the stolen assets of crypto theft victims. According to the South East Regional Organised Crime Unit (SEROCU), Wybo Wiersma, from the Netherlands, created the fraudulent website iotaseed.io to generate what his victims believed were […]
The post UK Law Enforcement Works With Kraken To Recover Nearly $2,320,000 Worth of Stolen Crypto for Fraud Victims appeared first on The Daily Hodl.
The Financial Conduct Authority (FCA) of the United Kingdom is releasing new guidelines for crypto firms on how to properly market digital assets. In a new press release, the regulatory agency unveils its updated rules for crypto firms on what information they must provide when marketing crypto assets. “Following a change in legislation, crypto assets […]
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Global payments giant PayPal just secured a license from financial regulators in the United Kingdom to operate as a crypto asset business. According to the Financial Conduct Authority (FCA) website, PayPal is registered for certain crypto asset activities effective October 31st as required by the UK’s money laundering regulations. Under the Money Laundering, Terrorist Financing […]
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Financial regulators in the United Kingdom are reportedly planning to legislate new regulations for the crypto industry in the country. According to Reuters, the UK Finance Ministry, Great Britain’s top financial regulator, plans to both develop and implement sweeping rules for regulating crypto. Great Britain is following in the footsteps of the European Union (EU), which […]
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Many of the firms the FCA warned were breaching the new rules appear to be dubious high-yield return schemes, but legitimate firms have seen warnings too.
Crypto-promoting firms have breached the United Kingdom’s new crypto marketing rules at least 221 times since coming into force in early October, says the country’s financial regulator.
In an Oct. 25 statement, the U.K. Financial Conduct Authority (FCA) said since the Oct. 8 crypto promotion rules came into place, firms are still failing to provide visible enough risk warnings, provide adequate information about risks, and are making claims about the safety, security or ease of using crypto without highlighting the risks involved.
The FCA’s latest warning count comes after it said on Oct. 9 that it issued 146 alerts on breaches of the new rules in the 24 hours after the new regime went live.
Find out the 3 common issues we've identified with #cryptoasset financial promotions.
— Financial Conduct Authority (@TheFCA) October 25, 2023
Consumers should check the FCA Warning List before making any investment in #cryptohttps://t.co/CKn4cFxb11
While many of the FCA’s crypto-related alerts appear to be illegitimate schemes offering high-yield returns on crypto investments, the FCA has taken action against seemingly legitimate businesses as well.
An Oct. 10 statement noted it had placed restrictions on Rebuildingsociety — the FCA-regulated firm Binance partnered with to approve its marketing and communications to comply with the FCA’s new rules. Binance subsequently halted onboarding new U.K. users.
“We expect authorized firms approving the financial promotions of cryptoasset firms to take their regulatory obligations seriously,” the FCA statement said. “Where this is not happening, we will take action.”
It added it’s working with social media platforms, app stores, search engines, domain name registrars and payment providers to remove, block and stop the flow of funds to banned promotions.
Related: Largest DeFi protocol on Solana reportedly quits UK market, citing FCA rule
Under the new rules, crypto-related ads can only be promoted or approved by FCA-authorized or regulated firms and applies to all businesses — even those without a U.K. presence.
The promotions must have “prominent risk warnings” and not incentivize investing in crypto. Promotions typical in overseas markets such as referral bonuses and memes are banned and restricted in the U.K.
Transak compliance head James Young told Cointelegraph the FCA’s regime is “very challenging” for businesses to implement but believes the consumer protection will increase adoption “on an exponential scale.”
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The Ministry of Justice’s proposed ‘Help with Fees’ scheme will not classify cryptocurrencies as disposable income following a public consultation.
British citizens that hope to access legal assistance through the proposed ‘Help with Fees’ (HwF) scheme will not have cryptocurrency holdings classified as disposable income.
The Ministry of Justice published its response following public consultation over its proposed legal aid scheme aimed at providing equal access to the justice system. HwF is aimed at providing financial support towards court or tribunal fees to individuals with low income and minimal savings.
The scheme intends to ensure that individuals are not prevented from accessing courts and tribunals due to an inability to afford the fees associated. The scheme’s primary objectives look to ensure access to justice for low-income individuals, provide money to taxpayers who ultimately bear the cost of fee remissions of the scheme, and ensure the scheme is accessible and eligibility criteria are clear.
Related: UK Law Commission recommends ‘distinct’ legal category for crypto
The public consultation process drew questions relating to the Ministry of Justice’s proposal to amend the definition of disposable capital to include ‘savings and investments’ with a ‘non-exhaustive list’ of examples which included cryptocurrencies.
According to the ministry, the majority of respondents support the proposal, highlighting that it helps capture investments that are not available as liquid assets.
Meanwhile, other respondents who disagreed with the specific proposal commented that applicants should not be penalized for having savings and investments, especially pensioners and self-employed individuals:
“There was also a comment that the non-exhaustive list is too vague and there should be more clarity, for example, that cryptocurrency should be included.”
The government’s response stressed that it would not propose an exhaustive list of the types of capital that would constitute ‘savings and investments’ as it would create “unnecessary risk” for all types of capital omitted or not yet developed.
“Furthermore, we confirm that cryptocurrencies are already covered by the current definition of capital under the Fees Orders, and they will continue to be covered by the proposed definition.”
The ministry plans to review its list in the public guidance accompanying HwF applications to assist applicants in figuring out whether certain types of capital are covered in its current definition.
The public response also notes that individuals that have savings or investments above a threshold of £16,000 will be expected to use these resources to pay legal fees before receiving assistance from the HwF scheme.
The UK has been inching closer to passing legislation that will bring cryptocurrencies under similar laws that govern traditional assets in the country. The Financial Services and Markets Bill is expected to give the Treasury, Financial Conduct Authority (FCA), Bank of England and Payments Systems Regulator the ability to proposed and enforce rules for cryptocurrency-related businesses.
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