| Updated: October 9, 2024If you are searching for a trustworthy crypto platform catering to UK traders and investors, you may be interested in our in-depth local market research. The BestBrokers team has compiled useful data on top-performing brokers and exchanges providing their services to UK customers. Furthermore, we have researched the related regulatory specifics, enabling traders to navigate the world of cryptocurrency trading with ease and confidence.
Fusion Markets74-89% of retail CFD accounts lose money
FP Markets73.85% of retail investor accounts lose money
Eightcap76.09% of retail investor accounts lose money
eToro51% of retail investor accounts lose money
CMC Markets71% of retail investor accounts lose money
Plus50080% of retail investor accounts lose money
IG70% of retail client accounts lose money
XTB80% of retail investor accounts lose money
Tickmill70% of retail investor accounts lose moneyUK Crypto Brokers Ranked by Trustpilot Score
| Forex Broker | Trustpilot Reviews | |
|---|---|---|
| 1. Fusion Markets | 1,662 | 4.9 ⭐ |
| 2. FP Markets | 6,706 | 4.8 ⭐ |
| 3. Eightcap | 2,460 | 4.2 ⭐ |
| 4. eToro | 24,180 | 4.2 ⭐ |
| 5. CMC Markets | 1993 | 4.1 ⭐ |
| 6. Plus500 | 13,613 | 4.1 ⭐ |
| 7. IG | 6,964 | 3.6 ⭐ |
| 8. XTB | 1,168 | 3.6 ⭐ |
| 9. Tickmill | 541 | 3.0 ⭐ |
UK Crypto Brokers Spreads
| Broker | BTCUSD | ETHUSD | SOLUSD | ADAUSD |
|---|---|---|---|---|
| 1. IG | 36 (min spread) | 1.2 (min spread) | 1.6 (min) | 1.4 (min) |
| 2. eToro | 0.75% | 1% buy, 1% sell | 1% | 1% buy; 1% sell |
| 3. XTB | 0.22% of market price | 0.25% of market price | 0.75% of market price | 0.45% of market price |
| 4. Tickmill | Minimum spread - 12 Typical spread - 24.9 | Minimum spread - 1.01 Typical spread - 2.06 | Minimum spread - 0.15 Typical spread - 0.15 | Minimum spread - 0.007 Typical spread - 0.02 |
| 5. CMC Markets | 75 | 5.25 | 20 | 25 |
| 6. Eightcap | 12.26 | 2.6 | 0.21 | 0.0051 |
| 7. Fusion Markets | 10.63 | 2.59 | 0.143 | 0.0 |
| 8. FP Markets | 1.27 | 2.7 | 0.2 | 0.0031 |
| 9. Plus500 | 0.30% | 8.1 (0.25%) | 3.21 (1.78%) | 0.00578 (1.39%) |
Top 9 Crypto Brokers in the UK
- 1. IG
Min. Deposit $50 – card payments No minimum for bank transfers
Regulations FCA, BaFin, DFSA, FSCA, MAS, ASIC Tradable Coins 11 major cryptocurrencies, two crypto crosses, and a crypto index Software MetaTrader 4, ProRealTime, L2 Dealer Crypto Leverage 10:1 for professional traders Fees BTC min spreads – 38 Exchange/Wallet n/a Deposit Methods Bank cards, bank transfers, PayPal Withdrawal Methods Bank cards, bank transfers Established in 1974, IG has carved a significant global presence in the trading industry. With a staggering portfolio of over 17,000 financial markets, advanced trading tools, and competitive charges, the brand has more than 300,000 customers worldwide. Eligible traders can trade on both rising and falling prices with leverage without the need for crypto wallets. They can speculate on price fluctuations in 11 major cryptocurrencies, two crypto crosses, or get wide exposure through the Crypto 10 index.
IG customers can protect their funds and cap losses with guaranteed stops. Besides the advantage of competitive spreads, traders will benefit from ultra-fast order execution. MT4, L2 Dealer, and ProRealTime are among the trading platforms supported by the brand. As for the available deposit and withdrawal methods, traders can use several bank card brands such as VISA, Mastercard, and Discover, bank transfers, and PayPal. In terms of security, IG offers 2-FA authentication and encryption protocols and keeps clients’ funds in segregated accounts.
Key Pros
- No minimum requirements for bank transfers
- Well-designed mobile app
- Demo accounts
- Competitive charges
- Robust regulation
Key Cons
- Limited selection of cryptocurrencies
- Some withdrawals may incur fees
- Inactivity fee
CFDs are complex instruments. 70% of retail client accounts lose money when trading CFDs, with this investment provider. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. - 2. eToro
Min. Deposit $10 Regulations FCA, CySEC, AMF, MFSA, ASIC, FSAS, FinCEN Tradable Coins 100+ Software eToro Investing, eToro CopyTrader, eToro mobile App Crypto Leverage 10:1 for professional traders Fees 1% fee for buying and selling crypto; 1% fee on crypto CFD trading Exchange/Wallet eToro Money Crypto Wallet Deposit Methods eToro Money, bank cards, Skrill, Neteller, PayPal, bank transfers, iDEAL, Trustly Withdrawal Methods Bank cards, Skrill, Neteller, Paypal, Trustly Established in 2007, eToro is our next suggestion for a reliable crypto trading platform, serving more than 30 million users across the globe. The company has acquired licenses from several regulatory authorities, including the CySEC in the EU, the FCA in the UK, and the ASIC in Australia. A variety of asset classes is available to the company’s customers, including more than 100 cryptocurrencies. Bitcoin is undoubtedly eToro’s most sought-after crypto. However, multiple other crypto assets are supported too, including Ethereum, Cardano, and Litecoin.
There are no account opening and management fees. A fixed fee of $5 is in place for all withdrawals, with minimums starting from $30. As for the related trading fees, the eToro investment platform enables investors to buy crypto assets against a 1% transaction fee. A 2% crypto asset transfer fee is charged when customers transfer their crypto assets to their eToro Money wallet. CopyTrader™ is among eToro’s standout features, enabling traders to replicate the investment moves of other traders in real time.
Key Pros
- Intuitive interface
- 5,000+ trading instruments supported
- 100+ tradable coins
- CopyTrader™
- Social trading
Key Cons
- A coin transfer fee of 2% for transfer of crypto from the eToro investment platform to the crypto wallet
- 5% withdrawal fee
- Emails are answered within 48 hours.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 51% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. - 3. XTB
Min. Deposit n/a Regulations FCA, CySEC, FSC Tradable Coins 40+ Software xStation 5 Crypto Leverage 10:1 for professional traders Fees BTCUSD – 0.22% of the market price Exchange/Wallet n/a Deposit Methods Bank transfers, bank cards, PayPal Withdrawal Methods Bank transfers, bank cards, PayPal XTB is among the largest stock-exchange-listed CFD brokers in the world, with more than 20 years of experience in the financial sphere. The broker is trusted by more than 1 million customers over the globe, with crypto enthusiasts being able to profit from rising and falling prices of more than 40 crypto assets. XTB has gained the regulatory approval of financial regulators including the FCA, CySEC, and the FSC. Regular market news help traders stay up to date with the latest developments in the financial industry and free demo accounts are on offer for novice traders.
Customers will benefit from competitive crypto spreads of 0.22% of the market price for Bitcoin and 0.25% of the market price for Ethereum. Beyond cryptocurrencies, the company offers stocks, ETFs, and CFDs on Forex, Indices, and Commodities. As for deposits and withdrawals, they come with no extra transaction costs.
Key Pros
- xStation platform
- Award-winning mobile app
- XTB Trading Academy
- Multilingual customer support
- Wide range of supported cryptocurrencies
Key Cons
- MT4 is no longer supported
- XTB Social is not internationally available
- No copy trading feature
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. - 4. Tickmill
Min. Deposit $100 Regulations FSA, FCA, DFSA, CySEC, FSCA, Tradable Coins 9 Software MT5, MT4, WebTrader Crypto Leverage 10:1 for professional traders Fees BTCUSD Minimum spread – 12
Typical spread – 24.9
Exchange/Wallet n/a Deposit Methods Bank transfers, crypto payments, bank cards, Skrill, Neteller, Sticpay, FasaPay, UnionPay, WebMoney Withdrawal Methods Bank transfers, crypto payments, bank cards, Skrill, Neteller, Sticpay, FasaPay, UnionPay, WebMoney Founded in 2014, Tickmill is another premier broker licensed by the FCA of the UK. The group has acquired licenses from other regulators, including the FSA, DFSA, CySEC, and FSCA. Consumers can choose between Classic and Raw accounts, based on their trading preferences. As for the supported trading platforms, Tickmill offers MT5, MT4, and WebTrader.
The broker’s asset classes include Forex, Stock Indices, Stocks and ETFs, Bonds, Commodities, Futures, and Options. Tickmill also offers traders the opportunity to profit from rising and falling prices of nine sought-after crypto coins, including Bitcoin, Ethereum, Litecoin, Cardano, Stellar, Ripple, Chainlink, EOS, and Solana. The broker provides a diverse range of deposit and withdrawal options, with no commissions on transactions and quick processing times within one working day.
Key Pros
- Competitive spreads
- Negative balance protection
- Tickmill Social Trading
- Signal Centre Tool
- Average monthly trading volume $129 billion
Key Cons
- No proprietary platform
- The news feed could be improved
- Relatively high deposit requirements for Pro accounts
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70% of retail investor accounts lose money when trading CFDs with Tickmill Europe Ltd. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. - 5. CMC Markets
Min. Deposit n/a Regulations FCA, ASIC, BaFin Tradable Coins 14 Software Next Generation Platform MT4
Crypto Leverage 10:1 for professional traders Fees BTCUSD Minimum spread – 75 Exchange/Wallet n/a Deposit Methods Credit and debit cards, online banking, bank wires Withdrawal Methods Credit and debit cards, online banking, bank wires Established in 1989 and listed on the London Stock Exchange, CMC Markets is a trustworthy broker that has been dedicated to the goal of making financial markets accessible to traders and investors. With more than 1 million customers globally, the company offers transparent pricing and dedicated customer service available 24/5. Crypto enthusiasts can choose between 14 major coins and altcoins, with minimum spreads for BTCUSD starting from 75, and for ETHUSD – from 5.25.
There are no minimum deposits required to start trading on the platform. Similarly, there are no restrictions imposed on withdrawals. Customers can deposit and withdraw primarily through bank cards and bank transfers, with their funds held in segregated accounts. Clients of CMC Markets will enjoy fast order execution, exclusive insights, and accurate signals to make the best of their cryptocurrency trading.
Key Pros
- Proprietary Next Generation platform
- Innovative trading tools and market research
- Wide range of assets
- Rebates for high-volume traders
- No minimums on deposits and withdrawals
Key Cons
- No MT5 platform
- Limited payment methods
- No copy trading support
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. - 6. Eightcap
Min. Deposit $100 Regulations FCA, SCB, ASIC, CySEC Tradable Coins 100+ Software MT4, MT5, TradingView Crypto Leverage 10:1 for professional traders Fees BTCUSD Minimum spread on Standard account – 170 Exchange/Wallet n/a Deposit Methods Credit and debit cards, PayPal, Skrill, Neteller, POLi, bank transfers, cryptocurrencies Withdrawal Methods Credit and debit cards, PayPal, Skrill, Neteller, POLi, bank transfers, cryptocurrencies Eightcap was established in 2009 in Melbourne, Australia, with the clear mission to deliver exceptional financial services to its customers. The broker has 5 offices across the globe and the regulatory approval of top-tier financial authorities, including the FCA, ASIC, and CySEC. The broker supports a portfolio of more than 100 crypto derivatives, all featuring competitive spreads.
Eightcap offers its customers the unique opportunity to compare the company’s fees and specifications with the ones offered by other major international brokers. Deposits and withdrawal methods vary based on the region traders are from – Europe, Australia, Asia, UK, LATAM, or Canada. Eightcap supports several leading trading platforms, with the options being TradingView, MT4, MT5, and WebTrader. Advanced trading tools are not missing either such as an AI-powered economic calendar, and Flashtrader. Furthermore, Capitalise.ai offers a full suite of analytics and automated trading tools.
Key Pros
- 100+ crypto derivatives
- AI-powered Economic Calendar
- Events and Webinars
- TradingView integration
- Code-free automation with Capitalise.ai
Key Cons
- No copy trading feature
- Support is not available on weekends
- Educational resources are limited
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76.09% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Min. Deposit n/a Regulations ASIC, VFSC, FSA Tradable Coins 13 Software MT4, MT5, cTrader, TradingView Crypto Leverage 10:1 for professional traders Fees BTCUSD Minimum spread – 10.63
Average spread – 20
Exchange/Wallet n/a Deposit Methods Visa, Mastercard, PayPal, PayID, BinancePay, Bank Wire Transfer, Jeton, Perfect Money, Neteller, Skill, Crypto Withdrawal Methods Skrill, PayPal, Neteller, Bank Wire Transfer, Jeton, AstroPay, Perfect Money, MiFinity, Crypto Founded in 2017, Fusion Markets is an award-winning regulatory-compliant broker catering to traders all over the globe with super-competitive fees and spreads. From forex, energy, and precious metals to commodities and cryptocurrencies, Fusion Markets enables customers to profit from global markets and build a comprehensive asset portfolio.
The broker supports several advanced trading platforms, with options including MT4, MT5, TradingView, and cTrader. The range of crypto CFD assets available for trading includes Bitcoin, Ethereum, Dogecoin, Solana, Cardano, and Bitcoin Cash, among others. Spreads are competitive, with minimums for BTC starting from 10.63. Customers can choose from various options to top up their trading accounts and withdraw their profits from successful trades. Some of the deposit and withdrawal methods at their disposal include bank cards, bank transfers, crypto, and PayPal.
Key Pros
- Competitive trading costs
- Zero and Classic accounts
- DupliTrade
- Fusion+ Copy Trading
- Helpful customer support
Key Cons
- Limited educational resources
- Demo accounts expire in 30 days
- A minimum of $30 for wire transfer withdrawals
Gleneagle Asset Management Limited (ABN 29 103 162 278) trading as Fusion Markets, is the issuer of the Fusion Markets Products described in this communication. Trading in Fusion Markets Products involves the potential for profit as well as the risk of loss which may vastly exceed the amount of your initial deposit and is not suitable for all investors. You should read all of these Financial Product Service Terms, the Product Disclosure Statement (PDS) and the Financial Services Guide (available on our website) carefully, consider your own financial situation, needs and objectives for investing in these Fusion Markets Products and obtain independent financial advice.- 8. FP Markets
Min. Deposit $50 ($100 Bank Transfer) Regulations ASIC, CySEC Tradable Coins 12 Software MT4, MT5, cTrader, WebTrader Crypto Leverage 10:1 for professional traders Fees BTCUSD Average Spread of 1.27 Exchange/Wallet n/a Deposit Methods Bank cards, PayPal, Neteller, Skrill, bank transfers Withdrawal Methods Bank cards, PayPal, Neteller, Skrill, bank transfers FP Markets is another top-tier crypto broker that has been operating since 2005. It complies with the regulatory requirements of the financial authorities in Cyprus (CySEC) and Australia (ASIC). The broker’s dedication to excellence has not remained unnoticed in the financial industry, with several awards already received.
Customers interested in trading both rising and falling prices of cryptocurrencies in a 24/5 market will have access to 12 crypto CFDs, including Bitcoin, Ethereum, Solana, and Cardano, among others. FP Markets has integrated several advanced platforms, including MT4, MT5, and cTrader, to provide its customers with the best trading environment available on the market. Leverage for crypto CFD trading is capped at 10:1 for professional traders. The range of supported payment options includes bank cards, bank transfers, PayPal, and several e-wallets.
Key Pros
- Standard and Raw accounts for diverse trading preferences
- News and economic calendar
- Technical indicators and charts
- Customizable alerts
- Fast trade execution of under 40 ms
Key Cons
- Limited educational materials
- No proprietary trading platform
- The variety of tradable coins could be improved
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72.92% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. - 9. Plus500
Min. Deposit $100 Regulations FCA, CySEC, EFSA, FMA, FSA, FSCA, MAS, FSA Tradable Coins 20+ Software Proprietary platform Crypto Leverage 10:1 for professional traders Fees BTCUSD spread – 200.23 Exchange/Wallet n/a Deposit Methods VISA, Mastercard, Bank Transfer, PayPal, Skrill Withdrawal Methods VISA, Mastercard, Bank Transfer, PayPal, Skrill Founded in 2008, Plus500 has a presence in more than 50 countries, 26+ million registered users, and $800 billion in trading volume. The broker enables crypto trading enthusiasts to access a variety of popular financial instruments, including more than 20 crypto CFDs. Besides Bitcoin and Ethereum, other coins on offer are BNB, Cardano, Solana, and Tron, to mention a few.
Advanced analytic tools are available and an opportunity to use a leverage of 10:1 for professional traders. The company’s +Insights tool enables customers to discover a universe of exceptional trading data to assist in their trading journey. Traders can also benefit from the experience of other successful users and apply it to their trading strategy. They can also analyze trading tendencies and monitor other traders’ moves.
Key Pros
- User-intuitive platform
- Easy account opening
- +Insights
- Robust regulation
- Unlimited demo account
Key Cons
- No phone support
- High currency conversion fees
- Limited educational materials
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 80% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
UK Crypto Exchanges Ranked by Trustpilot Score
UK Crypto Exchanges Comparison Table
| Exchange | Maker/Taker Fees | Staking | Deposits Fees | Withdrawal Fees |
|---|---|---|---|---|
| 1. MEXC |
|
| Free |
|
| 2. Coinbase | Taker fee between 0.05% and 0.60% depending on monthly traded volume; Maker fee between 0% and 0.40% depending on monthly traded volume |
|
|
|
| 3. OKX | Regular users - 0.140%/0.230% |
| Free | An automatically calculated fee applies to on-chain withdrawal transactions. |
Top 3 Crypto Exchanges in UK
MEXC
Launched in 2018, MEXC has quickly become a popular crypto trading platform offering competitive spot and futures maker and taker fees. Besides the low fees and high profits, MEXC is known for its speedy listing capacity and wide crypto variety. Security will be the least of your worries, with a world-class security system in place.
The exchange offers investors more than 2,800 coins and a maximum allowable leverage of 200:1. Besides spot and futures trading, MEXC enables investors to stake and profit from their crypto assets, with an Annual Percentage Yield (APY) of up to 8.8%. They can choose between locked savings and flexible savings, based on their plans to hold assets for shorter or longer term. As for deposit fees, MEXC does not charge such. Withdrawal fees depend on the crypto and blockchain.
| MEXC Crypto Exchange Details | |
|---|---|
| Min. Deposit | 0.01 USDT |
| Regulation | n/a |
| Tradable Coins | 2,800+ |
| Ways to trade crypto | Crypto Futures Crypto Spot Trading |
| Crypto Leverage | 200:1 |
| Maker/Taker Fees | Spot: 0.0%/0.0%; Futures: 0.0%/0.010% |
| Wallet | Yes |
| Deposit Methods | Visa, Mastercard, SEPA, MoonPay, Banxa, Simplex, Mercuryo |
| Withdrawal Methods | On-chain withdrawal (to a wallet or another exchange) |
Key Pros
- Low fees and high profits
- First to list 2,000+ cryptos
- World-class security
- MEXC app for iOS and Android
- 10+ million users from 170+ countries
Key Cons
- Withdrawals of fiat currencies are not supported
- Educational resources could be improved
- High withdrawal fees
Coinbase
Founded in 2012, Coinbase is the largest cryptocurrency exchange in the US in terms of trading volume. The secure platform makes the process of buying, selling, transferring, and storing crypto easy and hassle-free. Coinbase is suitable for new crypto traders with its extensive resources dedicated to tips and tutorials, a comprehensive glossary, and regular market updates. The Coinbase Wallet enables traders to protect their digital assets with top-tier security. The wallet supports a broad range of coins and a variety of decentralized apps.
The company uses a maker-taker fee model based on customers’ current pricing tier. Additionally, traders can earn up to 12% APY on their crypto assets. Based on the token they stake, the reward values vary. In terms of deposit and withdrawal fees, some methods are free, while others incur additional costs.
| Coinbase Crypto Exchange Details | |
|---|---|
| Min. Deposit | n/a |
| Regulation | CFTC (US), FCA, CBI |
| Tradable Coins | 260+ |
| Ways to trade crypto | Spot, Margin Derivatives (Futures) |
| Crypto Leverage | Up to 10:1 |
| Maker/Taker Fees | 0.40%/0.60% (first tier) |
| Wallet | Self-custody Coinbase wallet |
| Deposit Methods | Debit cards, Bank Transfer, PayPal, Apple Pay, Google Pay |
| Withdrawal Methods | Debit cards, Bank Transfer |
Key Pros
- Access to 260+ cryptocurrencies
- Easy purchasing of crypto
- Robust security features
- Advanced order types
- Staking supported cryptocurrencies
Key Cons
- Higher fees compared to other exchanges
- The support can be slow at times
- More crypto coin options could be added
OKX
Founded in 2017, OKX is a Seychelles-based exchange, having a global presence in more than 100 countries. Widely acclaimed for its user-intuitive interface, high-end security measures, and broad range of trading options, OKX is equally suitable for new and experienced traders. OKX supports more than 350 crypto assets, with some of the more popular ones including Bitcoin, Ethereum, Tether, BNB, Solana, XRP, and USDC.
OKX offers different fees for its regular and VIP users (8 VIP levels), based on their assets under management and 30-day trading volumes. Customers can also earn crypto rewards with on-chain staking. The exchange offers staking of more than 30 crypto coins with varying annual percentage rates from 0.19% to 34.79%. There are no fees on deposits and withdrawals. On-chain withdrawal transactions incur a fee, which is automatically calculated.
| OKX Crypto Exchange Details | |
|---|---|
| Min. Deposit | n/a |
| Regulation | n/a |
| Tradable Coins | 350+ |
| Ways to trade crypto | Spot, margin, futures, perpetuals, options |
| Crypto Leverage | 100:1 on futures 10:1 on spot trades |
| Maker/Taker Fees | 0.140%/0.230% |
| Wallet | Yes |
| Deposit Methods | VISA, Mastercard, Apple Pay, SEPA, iDEAL, Pix, Bank Transfers |
| Withdrawal Methods | SEPA, iDEAL, Pix, Bank Transfers |
Key Pros
- Low-cost trades
- Good selection of crypto coins
- Demo account
- TradingView integration
- Advanced trading features (stop-loss, limit, take-profit-orders)
Key Cons
- Verification can take up to 24 hours
- Unclear withdrawal fees
- Reported issues with customer support
Legal Status of Cryptocurrency Trading in the UK
While cryptocurrencies have become widely known and easily accessible for investments around the world, the legal status of cryptocurrency trading varies by jurisdiction. Cryptocurrencies are completely legal in the UK but are not considered legal tender. HM Revenue & Customs has classified cryptocurrencies as digital assets that are subjected to capital gains or income tax.
Cryptocurrency exchanges are legal in the UK, with several regulatory requirements to be considered by the relevant companies. As of January 2021, all crypto asset firms that have a presence in the UK or provide services to UK customers have had to be authorized by the Financial Conduct Authority (FCA). These businesses are required to adhere to AML/CFT reporting and offer consumer protection mechanisms. According to the rules and regulations set out by the FCA, these companies are required to conform to the Money Laundering, Terrorist Financing, and Transfer of Funds Regulations.
Besides the approval for registration from the FCA, applications to register for the crypto exchange license also require establishing a legal entity, maintaining a registered office address, registering for taxation, and opening a bank account.
January 2021 introduced another major change in the legal landscape of crypto trading. The Financial Conduct Authority (FCA) banned the trading of cryptocurrency derivatives by retail customers, leaving the market open only to professional traders. The financial authority aimed to protect retail consumers from the excessive volatility of crypto CFD assets traded with leverage and protect them from substantial losses.
What Forms of Crypto Trading Are Legal in the UK?
Residents of the UK are allowed to purchase and sell cryptocurrencies. However, as of January 6, 2021, the FCA has banned the sale, marketing, and distribution of derivatives (contracts for difference – CFDs, options, and futures) and exchange traded notes (ETNs) backed by cryptocurrencies to retail traders by companies operating in the UK. It is important to note that investors are allowed to hold and sell crypto investments that they have already owned.
According to the financial regulator, these products exposed retail consumers to an excess risk of losing their investments. According to estimations by the regulator, retail consumers would save approximately £53 million from the ban on these financial assets.
The authority deemed the products unsuitable for retail consumers due to the financial harm they may cause. The extreme volatility in crypto asset price fluctuations, coupled with the opportunity to leverage one’s position may expose consumers to “sudden and unexpected losses.”
Sheldon Mills, interim Executive Director of Strategy and Competition explained the FCA’s stance on crypto asset trading by retail traders: “Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives. We have evidence of this happening on a significant scale. The ban provides an appropriate level of protection.”
The ban, however, does not extend to professional traders or institutional firms, which have always had access to riskier investment options compared to retail traders. Following due verifications, they are allowed to speculate on rising and falling prices of crypto CFDs provided by brokers. To qualify for a Professional Client status, traders must meet several criteria. These include a certain number of transactions of significant size over the previous four quarters, an investment portfolio exceeding £500,000, and professional experience in the financial sector for at least one year. Traders must apply to receive a Professional Client status and be aware of particular protections they must waive as a consequence of their approval.
Who Regulates Crypto Trading in the UK?
The Financial Conduct Authority (FCA) is charged with the responsibility to oversee the financial industry in the United Kingdom. The regulator ensures that crypto asset providers comply with the respective Anti-Money Laundering and Countering Terrorism Financing (AML/CFT) regulations and procedures.
Additionally, the regulatory body keeps a record of crypto asset providers subject to UK money laundering regulations. As far as assets are concerned, security tokens fall under the regulation of the FCA. Other institutions in the UK that are involved in the regulation of the crypto market are HM Treasury and the Bank of England.
More specifically, the AML/CFT requirements in place for crypto companies in the UK encompass The Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017. Based on the nature and the type of assets on offer, companies must comply with The Financial Services and Markets Act 2000, and the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, as well as the Electronic Money Regulations 2011 or the Payment Services Regulations 2017.
To operate legally in the UK, crypto exchanges must register with the FCA, or apply for an e-money license. Additionally, Bitcoin ATMs on the territory of the UK must be licensed and regulated by the financial body.
Generally, the UK government is working towards the establishment of a more regulated crypto industry and traders must stay tuned to new developments and regulations.
Common Costs Associated with Crypto Trading in the UK?
Before they engage in cryptocurrency trading, UK traders must be aware of the fees and commissions involved in the process. Depending on the crypto trading platform that UK traders and investors choose, a brokerage company, or a cryptocurrency exchange, different fees are in place. Keep in mind they may impact your trading profitability, so comparing several brokers or exchanges is advisable.
Most crypto brokers organize their fee structure around spreads, or the difference between the bid and ask prices of cryptocurrencies. Highly sought-after cryptocurrencies such as Bitcoin may involve higher spreads compared to other less popular coins. Other fees that traders must check in advance include maintenance fees, overnight financing fees, payment processing fees, and inactivity fees. Most brokers do not charge deposit and withdrawal fees, however, this must be checked in advance, to avoid any unforeseen expenses.
Exchanges, in contrast, profit from the so-called maker and taker fees. Based on when orders are executed, and consequently, if they add or take liquidity to the marketplace, there are maker and taker fees. Exchanges consider their customers’ trading activity over a particular period and based on it, they offer different fee tiers.
Are Profits from Crypto Trading Taxed in the UK?
As mentioned above, profits from cryptocurrency trading in the UK are subject to capital gains tax or income tax, depending on the circumstances. Whether you are an experienced crypto investor or a complete novice, it is advisable to be aware of the HMRC’s treatment of crypto assets.
Profits from buying and selling crypto are most commonly subjected to capital gains tax (CGT). Losses ensuing from crypto trades could be used to offset the CGT bill. Swapping cryptocurrencies is also subjected to CGT. Traders pay CGT on their total gains above a tax-free allowance of £3,000 per year. Profits above this threshold will be taxed at 10% or 20%.
Income tax has been a quite new approach to the taxation of crypto assets adopted by the HMRC. Trading substantial amounts of crypto is subject to income tax, rather than CGT. If traders meet the trading threshold, net profits are subject to income tax of 20%, 40%, and 45%, based on their tax bracket and national insurance at 10% and 2%.
How to Pick Quality Crypto Brokers for the UK?
We have compiled a checklist of the most important features traders must consider to pick trading platforms that are perfectly adapted to their trading preferences.
Safety and regulation
Undoubtedly, safety and regulation come first. Regulated crypto brokers display their licenses somewhere on the homepage. Traders can also use the FCA register to double-check this information. Properly regulated brokers are required to hold a minimum amount of capital and keep customers’ funds in segregated accounts. KYC verification checks are another mandatory element, ensuring the safety of all clients.
Trading fees and commissions
Trading costs vary greatly from one trading platform to another and they must be carefully assessed. While some brokers profit from spreads, or the difference between the bid and ask price, others charge commissions based on the amount of the overall trade. Exchanges usually adopt the maker-taker system, charging makers and takers varying fees, based on their overall trading volume. Whatever your choice of platform is, you should know all your trading expenses.
List of supported cryptocurrencies
The list of supported cryptocurrencies is available for review to potential customers. Some trading platforms, such as eToro support more than 70 cryptocurrencies, enabling traders to diversify their portfolios and explore new opportunities. Usually, the list of coins offered for trading by crypto brokers is considerably smaller compared to the listings of cryptocurrency exchanges.
Trading tools
From charting tools to copy trading features, you may be interested in different trading tools that brokers offer. Crypto exchanges offer their customers the added opportunity to profit from their crypto holdings and support savings accounts, paying varying rates of Annual Percentage Yield (APY).
Deposit and Withdrawal Options
In terms of the deposit and withdrawal options, traders must check several aspects, including a variety of supported payment methods, processing fees, and minimum requirements, if any.
UK Crypto Brokers Q&A
Cryptocurrencies are legal in the UK but are not recognized as an official medium of payment by UK laws. As such, crypto assets can be lawfully purchased from crypto asset providers and stored in digital wallets. As for crypto CFD trading, it is available to professional traders only.
In January 2022, the UK government implemented more stringent regulations on crypto asset advertisements to shield consumers from misleading incentives. As per the newly accepted updates, cryptocurrency promotions are legalized to ensure more transparency. The FCA informed consumers that whenever they invest in crypto, prominent warnings of the associated risks must come into view. Furthermore, companies were prohibited from offering free gifts for new customers or refer-a-friend bonuses.
All UK users, involved in the sending and receiving of cryptocurrencies must be familiar with the Travel Rule, passed into law under Part 7A of the Money Laundering and Terrorist Financing Regulations. Designed to bring greater transparency to cryptocurrency transactions, it requires both parties of cryptocurrency transactions to provide additional details related to their name, country, and wallet type, among others.
Successful crypto trading does not depend on luck but on effective crypto trading methods relying on a broad spectrum of crypto tools. Some of the most common tools include currency converters, profit-loss calculators, crypto trading charts, and portfolio trackers, among others.
When trading in crypto CFDs, traders are not buying the underlying assets, therefore they do not need virtual wallets to store them. When buying and selling cryptocurrencies on an exchange, traders need virtual wallets. They can be broadly categorized into two types – hot wallets and cold wallets. While hot wallets are connected to the internet and thus less secure, cold wallets are offline and offer more security. Hot wallets are mostly used by day traders whereas cold wallets are favored by long-term investors.