⚖️ Is Bitcoin Legal in the UK?

Crypto regulation in the UK

For any Brit looking to put some money into Bitcoin, the answer to the question "Is Bitcoin legal in the UK?" would often determine whether they will proceed or not.

You will definitely feel at ease to learn that it is not a crime to invest in Bitcoin; otherwise, we would have 4.7 million Britons (the number of UK residents that have bought cryptocurrencies) behind bars.

But, while that knowledge is a good start, you’ll gain more insight by reading this in-depth guide about Bitcoin regulation in the UK. This guide is thorough as it goes beyond the surface question: is Bitcoin legal in the UK?

We cover every nook and cranny of the Bitcoin and cryptocurrency industry and let you know how regulations in the UK affect both business and end-consumers. To begin, here’s an overview of cryptocurrency regulations in the UK.

Cryptocurrency Regulations in the UK

Crypto regulation in the UK is fragmented. In other words, there is no single document that specifies the regulatory requirements for all industry participants. The reason is not far-fetched. The industry is still in its infancy, and imposed rules may need amendment within a short time.

Despite that unique challenge, the United Kingdom Financial Conduct Authority (FCA), Her Majesty's Revenue and Customs (HMRC), and the Bank of England (BoE) have, at one point or the other, published guidance that forms the basis for bitcoin regulation in the region.

In all, the FCA is the primary UK government regulator for cryptocurrencies since all businesses in the industry must apply for the requisite license and obtain approval before setting up shop. The FCA maintains a register of all crypto asset businesses in the region and often issues warnings against unregistered operators.

On the other hand, HMRC oversees crypto-related tax matters and has specified taxable events in its detailed guidance.

Next, we consider the FCA’s classification of the different types of cryptocurrencies that exist today.

Bitcoin and other cryptocurrencies

Bitcoin and other cryptocurrencies are “properties” according to the UK Jurisdictional Taskforce (UKJT) and falls into three main categories as per the FCA:

Token regulation in the UKIs cryptocurrency legal in the UK? An Excerpt From an FCA Guidance on Crypto Assets

  • Exchange Tokens

At the onset, we answered the question, is Bitcoin legal in the UK? The affirmative ‘Yes’ answer stems from a classification of cryptocurrencies provided by the FCA in 2019.

According to that guidance, tokens where there is usually not a single issuer to enforce rights against, as with Bitcoin fall outside of the regulator’s purview and are termed “exchange tokens.” The FCA agrees that Ether (ETH) and Litecoin (LTC) are also exchange tokens, and also mentions that some other cryptocurrencies fall under this parameter.

  • Utility Tokens

The FCA classifies as “utility tokens,” tokens that give its holders access to a “current or prospective product or service.” At the same time, these tokens do not grant holders rights as those granted by specified investments.

  • Security Tokens

Where a token provides its holders with rights and obligations similar to specified investments, then the FCA will regulate its distribution. Tokenised investments, such as shares or bonds, fall under this category.

Crypto exchanges

Coinbase Account Levels for Verified UsersCoinbase Account Levels for Verified Users

In its earliest response, UK government authorities made it clear that they would apply anti-money laundering and know-your-customer (AML/KYC) requirements,

The UK government’s transposition of the EU Fifth Anti-Money Laundering Directive (5AMLD) further made it pertinent for crypto-related businesses to identify and know their customers.

Today, UK-based crypto exchanges implement these procedures, requiring that users provide a means of identification and other personal information before they can trade freely on the platform.

Additionally, the FCA in 2023 introduced rules mandating crypto exchanges to acquire a license from the regulator or receive approval for marketing campaigns. The new rules were reportedly created to give consumers greater insight into the risks associated with crypto investing, empowering them to make informed investment decisions.

Although the new rules have forced certain crypto exchanges, notably including Binance and CEX.io to temporarily leave the UK, many exchanges are already compliant. Others who are currently non-compliant also appear to be working towards introducing new changes to continue serving the UK market.

Buying & Selling

UK residents of legal age can freely buy and sell cryptocurrencies as long as they do so on regulated platforms.

The FCA admittedly “appreciates that people may purchase crypto-assets for speculative purposes, anticipating that their value will increase,” but requires that such activities are carried out under regulatory perimeters where applicable. Businesses that wish to issue tokens that would otherwise be classed as “securities” must publish a prospectus and seek approval from the FCA.

Regarding taxation, you don’t need to pay taxes when you buy cryptocurrencies. However, you may need to pay capital gains tax when you sell if the profit realised from your initial investment goes beyond the tax-free allowance.

Cryptocurrencies received as payment for service rendered is considered income, and thus you may need to pay Income Tax or National Insurance contributions where applicable.

You can review HMRC’s exhaustive Crypto-Asset Tax Guidelines for Individuals and Businesses, to see what other taxes apply to buying and selling cryptocurrencies in the UK.

Cryptocurrency mining is legal in the UK, although you’ll have to pay a customs fee when importing the miner and cover any government-related fees associated with setting up such a business in your location.

HMRC applies an Income Tax and National Insurance tax on cryptocurrencies that are received from mining operations. An Income Tax, however, does not apply to tokens obtained from airdrops, especially those received without doing anything in return.

Argo Blockchain, listed on the London Stock Exchange (LSE), is one of the thriving cryptocurrency mining companies based in the United Kingdom.


It is legal to trade cryptocurrencies in the UK using regulated trading platforms. If you engage in this activity as an occupation, then an Income Tax, instead of a Capital Gains tax, would apply according to the HMRC.

However, certain cryptocurrency-related investment products (i.e., contracts for differences, futures, options) and exchange-traded notes (ETNS) are available only to institutional investors. We’ll cover the FCA’s bitcoin regulation for derivatives in the next subheading.


Following a two-year consultation period, the FCA announced in October 2020 that it would permanently ban the sale of crypto derivatives products to retail investors.

The regulator cited the inherent risks associated with such products, arguing, among other things, that there is no “clear investment need for investment products” referencing crypto assets for that class of investors.

As Bitcourier reported, the ban will come into force on January 6, 2021, with businesses offering such products urged by the regulator to desist from doing so.


Bitcoin ATMDevon’s first Bitcoin ATM once located at the Kingsbridge Information Centre

In March 2022, the UK FCA moved to shut down most crypto ATMs, alleging its operators had not acquired the requisite approval from the regulatory body. The move drastically impacted the number of Bitcoin ATMs in the U.K., with the number dropping from 289 Bitcoin ATMs in the UK to just one at the time of updating this article. 

Bitcoin regulation in the UK specifies that the operators of these machines must implement KYC/AML requirements, while end consumers must provide the requisite information before they can use them.

Businesses that wish to offer money transfer services and online payment processing for cryptocurrency-related transactions will have to apply with the FCA for an Authorized Payment Institutions (API) license.

London-based BCB Group became the first crypto-related firm to acquire such a license in 2020 and currently offers its services to institutional investor clients for cryptocurrency exchanges like Gemini.

See our list of Crypto-Friendly Banks in the UK.

Spending Bitcoin

Is Bitcoin legal in the UK? Yes, but it is not recognised as a ‘legal tender,’ as in the Bitcoin-friendly country, El Salvador. This simply means that you would still have to pay taxes after holding crypto-assets for a certain period and then spend a fraction of it to perhaps pay for goods and services. You can report profits or losses accrued over the holding period.

Crypto regulation in the UK also allows for the use of Bitcoin and cryptocurrencies for charitable purposes. However, such donations are not subject to Capital Gains Tax on them if the assets used for the gifting have not undergone a holding period.


As we mentioned at the onset, most potential investors must go past the stage of asking, is Bitcoin legal in the UK? before they can start putting their money on the line. In this article, we touched on different aspects of bitcoin regulation in the UK and considered how different regulatory bodies, especially the FCA, treat cryptocurrencies.

Whether you’re a consumer or a business owner looking to launch specific products for UK users, we recommend that you also consult legal practitioners for advanced guidance. By doing so, you will put yourself in a position where you can participate in a potentially revolutionary financial system while playing within the bounds of the law.