What is the legal status of cryptocurrency in the UK?

(A Legal Guide for Those Facing False Allegations)

By Natalie Popova, Legal Consultant | Express Law Solutions

Disclaimer: This article is for general information only and does not constitute legal advice. For specific guidance, contact Express Law Solutions.

1.1 Legal tender?

In the UK, cryptocurrencies such as Bitcoin, Ethereum or others are not legal tender. According to the Bank of England, crypto-assets do not qualify as “money” in the traditional sense and are not automatically accepted as a form of payment by law.

Thus, owning or trading them is not illegal per se, but their status is different from fiat currency.

1.2 Are crypto-assets regulated as financial instruments?

Currently, the UK does not have a single bespoke regulatory regime that treats all crypto-assets as regulated financial instruments. Many crypto-assets fall outside the perimeter of existing financial services regulation.

However, certain crypto-asset related activities are regulated or are being brought into regulation:

Activities such as dealing in, arranging transactions in, or advising on crypto derivatives may already fall within regulated activities under the Financial Services and Markets Act 2000 (FSMA) and associated Orders.
From 8 October 2023, the UK has extended the financial promotion rules under section 21 FSMA to cover “qualifying crypto-assets” marketed to UK consumers.
Under the Money Laundering Regulations (MLRs) 2017 (as amended) crypto-asset service providers (CASPs) doing certain business in the UK must register with the Financial Conduct Authority (FCA) as the AML/CTF supervisor.

1.3 “Is it officially legalised?”

While crypto-assets are not outright prohibited, you cannot assume automatic regulation or protection. The UK government, HM Treasury and the FCA are in the process of creating a comprehensive regulatory regime for crypto-assets, expected to take full effect by 2026.

In short: trading or owning crypto in the UK is permitted, but does not give you the same legal protections as trading in fully regulated financial instruments.

Thus, crypto is “legal” in the sense of being permitted, but not fully regulated or safe in the sense of traditional regulated products.

Regulation of Exchanges, Trading Platforms and Crypto-Asset Service Providers

2.1 Registration / authorisation of exchanges & custodial services

Crypto-asset firms operating in the UK (or targeting UK consumers) are subject to AML requirements under the MLRs. They must register with the FCA (or apply) if they provide services such as exchange, custody, transfer of crypto-assets.

The draft “Financial Services and Markets Act 2000 (Regulated Activities and Miscellaneous Provisions) (Cryptoassets) Order 2025” would, when made effective, require firms carrying on specified crypto-asset activities to obtain FCA authorisation.

It is vital for operators to be authorised or registered; otherwise they risk enforcement action (warnings, fines, criminal liability).

2.2 Financial promotion rules

Since 8 October 2023, any marketing/promotion of “qualifying crypto-assets” to UK retail customers must comply with the financial promotion regime. That means the promotion must be made by an FCA-authorised firm or approved by one, or falls within an exemption. Failure to comply is a criminal offence (unlimited fine and/or up to 2 years’ imprisonment).

This regime improves transparency and protects consumers from high-risk or misleading promotions.

2.3 Derivatives and investment products referencing crypto-assets

When a derivative (such as futures, options, CFDs) references a crypto-asset, it may be treated as a “specified investment” and therefore fall under existing regulation (e.g., MiFID II in the UK context). The FCA has made clear that such firms must comply with the regulated activities regime.

2.4 Custody & safeguarding

The upcoming regime will require crypto-custodians (holding client crypto-assets) to comply with rules on safekeeping, segregation of client assets, audit, governance and prudential standards. The consultation CP25/14 & CP25/15 issued by FCA set out proposals for “qualifying stablecoins” and “qualifying crypto-assets”.

2.5 Timeline & future developments

The regulatory roadmap shows full implementation of new rules by end of 2026.
Until then, firms must operate under the current regulatory perimeter (MLRs, FSMA promotion rules, AML regime) and keep up to date with consultation papers.
Investors should note: rigorous standards will apply, but not all risks or gaps presently closed.

What this means for users/traders/investors in the UK

3.1 Risks and protections

Because many crypto-assets are unregulated, they do not receive protections such as the Financial Services Compensation Scheme (FSCS).
The FCA has warned that consumers should be prepared to lose all their money when investing in crypto-assets.
Use of an unregistered exchange targeting UK customers can lead to enforcement action and potential loss of access or legal recourse.

3.2 Taxation and reporting

While regulatory status continues to evolve, UK tax law treats gains from selling or exchanging crypto-assets as chargeable to Capital Gains Tax (CGT) or Income Tax depending on the circumstances. Investors must report crypto transactions on Self-Assessment returns.

3.3 Practical steps for users

Before trading: check whether the platform is registered/authorised by FCA for crypto-assets.
Ensure marketing/promotions comply with UK rules: risk warnings, no misleading claims.
Keep clear records of purchases, transfers, disposals for tax and compliance purposes.
Be aware that new rules may change the landscape — stay updated.

Summary

Crypto-assets in the UK are permitted but not uniformly regulated as financial instruments.
A number of regulatory regimes apply (AML/CTF, financial promotions, derivative regulation) and a full specific crypto regime is expected by 2026.
Exchanges, custodians and service providers will need authorisation/registration and must comply with new standards.
Users/traders must exercise caution: many protections of traditional financial products do not apply; marketing/promotions are strictly regulated; tax treatment still applies.
If you are dealing with an exchange or crypto service provider in the UK, always check registration status and regulatory compliance.

Current UK Regulatory Framework for Crypto Exchanges & Platforms

Registration & AML/CTF obligations

Since 10 January 2020, firms carrying out certain crypto-asset activities (exchanges, custodians, wallet providers) must register with the Financial Conduct Authority (FCA) as the UK’s AML/CTF (anti-money laundering / counter-terrorist financing) supervisor.
Even if an exchange is registered under AML rules, this does not necessarily mean it is fully regulated as a financial services firm. Tokens that are “exchange tokens” (e.g., Bitcoin, Ether used as means of exchange) generally fall outside the perimeter of regulated investments.

Financial promotions & marketing

From 8 October 2023, the Financial Promotion Order was amended so that any promotion of “qualifying cryptoassets” to UK consumers must be made by an authorised person, or approved by one, unless an exemption applies.
Exchanges or trading platforms marketing to UK retail customers must comply with promotion rules, risk disclosures and investor appropriateness assessments.

Intermediary / trading venue obligations

The UK government has proposed that activities such as operating a crypto-asset trading venue, admitting cryptoassets to trading, dealing in cryptoassets as principal or agent, and arranging transactions in cryptoassets will be regulated under the Financial Services and Markets Act 2000 (“FSMA”) when the new regime is implemented.
The Bank of England and FCA are working together on proposals for stablecoins, custody and prudential regulation of crypto-asset firms.

What this means for exchanges & trading platforms

A UK-based platform offering fiat-to-crypto conversions, custody of cryptoassets, or trading services to UK customers must register with the FCA and comply with AML/CTF rules.
If the platform intends to offer more “investment-type” services (e.g., crypto derivatives, or exchange-traded products), it will likely require full authorisation under FSMA or variation of permissions.
Retail user protections (such as the UK’s Financial Services Compensation Scheme (FSCS)) often do not apply to cryptoassets unless specifically regulated. So users should check platform status, asset treatment and custody arrangements.
Platforms must conduct risk disclosures, investor appropriateness assessments, and comply with marketing/promotions rules if dealing with UK retail clients.

Emerging regulatory changes & future developments

The UK government announced draft legislation in April 2025 to bring crypto-asset activities into the regulated perimeter, including trading venues, custody, lending and stablecoins.
The FCA’s “crypto roadmap” indicates full implementation may come in 2026.
Platforms should prepare for new rules on custody, stablecoin issuance, operational resilience and disclosure obligations.

Key practical take-aways for users & firms

For users/traders/investors: Always check whether a platform is registered with the FCA, understand whether your crypto-assets are within regulatory protection, keep thorough records for tax and legal purposes.
For platforms/exchanges: Ensure AML/CTF registration, comply with promotion and marketing rules, anticipate authorisation or variation of permissions for regulated activities, and design robust custody and governance frameworks.

Cryptocurrency Scams in the UK and How to Protect Yourself

Main Types of Scams
Fake investment platforms – websites promising “guaranteed profits” or “high returns” from Bitcoin, Ethereum, and other crypto investments.

They often look professional but are not registered with the Financial Conduct Authority (FCA).
Once a person invests, contact is cut off and the funds disappear.

Imitations of major exchanges (phishing) – criminals create fake copies of sites like Binance, Coinbase, or Kraken to steal wallet credentials or passwords.
Romance and social scams – scammers build trust via social networks or dating apps and convince victims to “invest” in a crypto project.
“Recovery scams” – after an initial scam, other fraudsters appear, promising to recover lost funds for a fee.
Pump-and-dump schemes – groups manipulate the price of obscure tokens, then sell at the peak, leaving small investors with devalued assets.

What UK Law Says

The FCA regulates certain activities, mainly those related to anti-money laundering (AML).
If a company or individual offers investment services without registration, this may violate the Financial Services and Markets Act 2000 (FSMA).
Victims of scams can report to:
Action Fraud – the UK national reporting centre for cybercrime
FCA ScamSmart – for company verification and warnings
Police / National Crime Agency (NCA) – for significant financial losses

How to Protect Yourself

Check company registration – all legitimate crypto platforms in the UK must be registered with the FCA:

FCA Register

Beware of “guaranteed profits” – cryptocurrencies are volatile; no one can guarantee returns.

Use only official apps and websites – always check the URL and enable two-factor authentication (2FA).

Never share private keys or seed phrases – they grant full access to your wallet.
Be cautious on social media – scammers often pose as “financial advisors” or “crypto experts.”
Check exchange licenses – even major names like Binance have limitations in certain jurisdictions.

Practical Advice

Keep cryptocurrencies in your own cold wallet, not on an exchange.
Keep records of all transactions – they may be needed for tax purposes or attempts to recover funds.
If in doubt, consult a financial law lawyer or FCA-approved adviser.

If you want, I can prepare an official legal analysis or article (Word/PDF) titled:

Cryptocurrency Regulation and Fraud Prevention in the United Kingdom – Legal Overview and Practical Guidance

It would include:

References to UK laws (FSMA 2000, MLR 2017, Fraud Act 2006)
Links to FCA and Action Fraud
Practical recommendations for clients and lawyers

If you want, I can create a ready-to-publish professional version formatted for article, video script, or presentation, in clean legal English with headings, links, and bullet points.

Global Cryptocurrency Regulations

Cryptocurrencies (Bitcoin, Ethereum, Ripple, etc.) are regulated differently across countries. Key trends include:

Licensing and registration – Many countries require crypto exchanges and service providers (wallet providers, custodians) to be registered with national financial regulators.
AML/KYC obligations – Exchanges and service providers must implement Anti-Money Laundering (AML) and Know Your Customer (KYC) checks.
Taxation – Crypto transactions are often treated as capital gains or income, requiring proper reporting.
Bans and restrictions – Some countries (China, partially Russia) ban crypto trading or mining.
ICOs and token regulation – New crypto projects (Initial Coin Offerings) may be treated as securities in the US, EU, and other jurisdictions, subject to securities laws.

United Kingdom and Cryptocurrencies

The UK has a specific regulatory framework:

FCA Regulation – The Financial Conduct Authority oversees crypto-related firms, mainly regarding AML and KYC compliance.
- Exchanges and wallet providers must be registered under the Money Laundering Regulations 2017 (MLR 2017).
Investment services – Offering crypto investment products without registration may violate the Financial Services and Markets Act 2000 (FSMA 2000).
Warnings and alerts – The FCA regularly publishes warnings against unlicensed crypto platforms.
Alignment with global standards – The UK follows G20 and FATF standards for anti-money laundering and counter-terrorist financing.

Conclusion

The UK is an active participant in global crypto regulation, though less strict than countries like the US regarding investment products.
Regulation is mainly AML/KYC-focused, with clear warnings against scams and unregistered platforms.
For legal and investment purposes, it is important to monitor FCA guidance and international standards (FATF, EU directives).

I can also create a comparative table of global crypto regulations with columns for the UK, US, EU, and Asia – perfect for an article, presentation, or video.

А comparative table of global cryptocurrency regulations, including the UK, US, EU, and Asia, in a clear and concise format suitable for articles, presentations, or videos:

Region / Country	Regulatory Authority	Key Regulations	Scope / Focus	Notes
United Kingdom	Financial Conduct Authority (FCA)	FSMA 2000, MLR 2017	AML/KYC compliance for exchanges and wallet providers; investment products regulated if offered without registration	Active participant in G20/FATF standards; warnings for scams; mainly AML-focused, less strict on investment products
United States	SEC, CFTC, FinCEN	Securities Act 1933, Investment Company Act, Bank Secrecy Act	Securities classification of tokens; AML/KYC; exchanges often must register as money transmitters	Highly regulated for ICOs and investment products; strong enforcement actions
European Union	European Commission, ESMA, national regulators	MiCA (Markets in Crypto-Assets Regulation, coming into effect 2024), AMLD5	Licensing of exchanges and wallets; consumer protection; AML/KYC	Harmonizes crypto regulation across EU; stricter rules for stablecoins and token offerings
China	People’s Bank of China (PBOC)	Crypto ban (trading, ICOs, mining restrictions)	Prohibition of crypto trading and issuance; AML for token-related activities	One of the strictest bans globally; enforcement is strong
Japan	Financial Services Agency (FSA)	Payment Services Act, Financial Instruments and Exchange Act	Licensing of exchanges; AML/KYC; consumer protection	Regulated environment; exchanges must be registered and compliant
Singapore	Monetary Authority of Singapore (MAS)	Payment Services Act, Securities and Futures Act	Licensing of payment and crypto service providers; AML/KYC; ICOs may be securities	Attractive for crypto businesses due to clear guidelines and regulatory sandbox
South Korea	Financial Services Commission (FSC)	Act on Reporting and Use of Certain Financial Transaction Information	Exchanges must register; AML/KYC; real-name banking system for crypto trading	Strong AML enforcement; regulatory clarity for exchanges

Legal Conclusion

The global cryptocurrency landscape remains complex and rapidly evolving. While some jurisdictions adopt permissive and innovation-friendly approaches, others impose strict bans or regulatory constraints. The United Kingdom positions itself as a proactive participant in international standards, particularly in AML/KYC compliance, consumer protection, and alignment with FATF and G20 recommendations.

From a legal standpoint:

FCA registration is mandatory for any exchange or wallet provider operating in the UK. Offering crypto investment services without proper authorization constitutes a breach of FSMA 2000 and can trigger civil and criminal liability.
Victims of crypto fraud have clear legal recourse through Action Fraud, FCA ScamSmart, and, in significant cases, the National Crime Agency (NCA).
Investors must exercise due diligence, maintain transaction records, and secure assets in private wallets to minimize exposure to fraud and regulatory risks.

In essence: while cryptocurrencies present innovative financial opportunities, their legal and regulatory environment is highly jurisdiction-dependent. Compliance with national regulations, combined with adherence to global AML/KYC standards, is the only legally defensible strategy to protect both firms and individual investors.

Bottom line: The UK provides a structured, law-abiding framework that balances innovation with consumer protection. Ignoring these requirements exposes parties to substantial legal and financial risks.

Frequently Asked Questions (FAQ) – Crypto Regulation and Fraud in the UK

Q1: Are cryptocurrencies legal in the UK?

A: Yes, cryptocurrencies like Bitcoin and Ethereum are legal in the UK. However, they are not considered legal tender, and their use is regulated mainly through AML/KYC rules for exchanges and service providers.

Q2: Do I need FCA registration to operate a crypto business in the UK?

A: Yes. Any company offering crypto exchange, wallet services, or certain investment products must register with the FCA under the Money Laundering Regulations 2017. Operating without registration can violate FSMA 2000.

Q3: Can the FCA guarantee profits from crypto investments?

A: No. The FCA does not guarantee investment returns. All crypto investments carry risk, and claims of “guaranteed profits” are a common red flag for scams.

Q4: What should I do if I suspect a crypto scam?

Report it to Action Fraud (the UK’s national cybercrime reporting center).
Check the platform on FCA ScamSmart for warnings.
If significant funds are involved, contact the National Crime Agency (NCA) or the police.

Q5: Are UK crypto regulations aligned with global standards?

A: Yes. The UK follows FATF and G20 recommendations, particularly on AML/KYC, consumer protection, and reporting obligations. This ensures consistency with many international jurisdictions.

Q6: Should I keep my crypto on an exchange or in a personal wallet?

A: For security, it is strongly advised to store crypto in a personal cold wallet rather than on exchanges. This reduces the risk of hacks or insolvency of the platform.

Q7: Are Initial Coin Offerings (ICOs) regulated in the UK?

A: ICOs may fall under securities regulation depending on their structure. Offering an ICO without proper authorization can violate FSMA 2000. Always consult a financial lawyer before launching an ICO.

Q8: Can I recover lost funds from a crypto scam?

A: Recovery is difficult. Some recovery services exist, but “recovery scams” are common, so verify legitimacy before paying anyone. Legal recourse includes reporting to Action Fraud and potentially seeking civil claims if the perpetrator is identifiable.

Q9: How can I verify if a crypto platform is legitimate?

Check the FCA register: https://register.fca.org.uk/s/
Confirm proper AML/KYC compliance
Look for professional audits or licenses
Avoid platforms promising guaranteed profits or pressure tactics

Q10: Are there tax obligations for crypto transactions in the UK?

A: Yes. Crypto gains are generally subject to Capital Gains Tax (CGT). Businesses and individuals must keep accurate records of purchases, sales, and conversions.

References

Financial Conduct Authority (FCA) – Cryptoassets
- Overview of crypto regulation, registration requirements, and investor warnings.
- https://www.fca.org.uk/consumers/cryptoassets
FCA – ScamSmart
- Tool to verify whether a crypto company is authorized or has warnings.
- https://www.fca.org.uk/scamsmart
FCA Register
- Official register of firms authorized under FSMA 2000.
- https://register.fca.org.uk/s/
Action Fraud – Reporting Fraud and Cybercrime
- UK’s national reporting center for scams, including crypto fraud.
- https://www.actionfraud.police.uk/
Financial Services and Markets Act 2000 (FSMA)
- Primary legislation governing financial services and investment activity in the UK.
- https://www.legislation.gov.uk/ukpga/2000/8/contents
Money Laundering Regulations 2017 (MLR 2017)
- Legal framework for AML/KYC obligations, including crypto exchanges and wallet providers.
- https://www.legislation.gov.uk/uksi/2017/692/contents/made
Fraud Act 2006
- Defines criminal offences related to fraud in the UK.
- https://www.legislation.gov.uk/ukpga/2006/35/contents
FATF Guidance – Virtual Assets and Virtual Asset Service Providers
- Global standards for AML/KYC and counter-terrorist financing in crypto.
- https://www.fatf-gafi.org/publications/fatfrecommendations/documents/virtual-assets.html
G20 Cryptoasset Policies
- International policy recommendations for crypto regulation and financial stability.
- https://www.g20.org/
HM Revenue & Customs (HMRC) – Cryptoassets Tax
- Guidance on taxation of crypto gains and record-keeping requirements.
- https://www.gov.uk/government/publications/tax-on-cryptoassets

Disclosure / Legal Notice:

All names and identifying details in the following case studies have been changed to protect client confidentiality. These examples are based on real scenarios, but any resemblance to actual persons or entities is purely coincidental.

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