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How to buy cryptocurrency in the UK

In recent months, you’ve probably seen a considerable amount of news regarding cryptocurrency and it is hard not to take an interest. Due to the high levels of growth in these markets, it can seem easy to get rich very quickly.

You’ve probably read plenty of stories online about investors who made their fortune buying and selling bitcoin through cryptocurrency exchanges and wondered how you can do that too. It certainly seems simple enough to transform your initial investment into a pile of bitcoin cash, but there may be more to it than initially meets the eye.

Since it can be different from traditional investments, cryptocurrency trading can be very different from setting up a normal investing portfolio so it is important to do your research beforehand.

If you want to trade cryptocurrencies such as bitcoin, read on for everything you need to know to learn how to buy cryptocurrency UK.

Lists of the best platforms to buy crypto in the UK at a glance

I’ve compiled a list of suitable platforms you can buy cryptocurrency as a UK investor.

Please note: Cryptoassets are unregulated in some countries like the UK, and there is no consumer protection. Capital at risk.

eToro

eToro

Buy & sell crypto instantly
Hassle-free deposits & withdrawals
Free market research & analysis tools

67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Your capital is at risk. Other fees apply. For more information, visit etoro.com/trading/fees

BlockFi

BlockFi

Get up to $250 FREE in Bitcoin for funding an account
Buy, sell and earn cryptocurrency
Earn up to 9% APY on your cryptocurrency

Capital at risk.

Coinbase

Coinbase

Get £5 in Bitcoin when you sign up and verify your account
Use Code BUZZFIRE5

After your photo ID is verified, £5 in BTC will be added to your portfolio. Limited time offer. Offer available to new users who have not previously verified their identification. Offer not available to new users who were referred to Coinbase through the Referral Program or who have previously opened an account using different contact information. Coinbase may update the conditions for eligibility at any time, in its sole discretion.

NAGA

NAGA

Autocopy the trading strategies of the best-performing traders at NAGA

Capital at risk.

Bitpanda

Bitpanda

Start with €1 investing in digital assets like Bitcoin, gold and more

Capital at risk.

Gemini

Gemini

Access to 45+ cryptos including bitcoin, ether, and dogecoin
Great tools for beginners and active traders
Get started with as little as $5

Capital at risk.

Coinsmart

Coinsmart

Open an account in under 2 minutes
Buy and sell cryptocurrencies
Simple and transparent fees

Capital at risk.

Revolut

Revolut Crypto

Make trades from just $1
Invest in Bitcoin, Ethereum and other tokens with 30+ currencies
Buy, sell, and send digital currencies with no hidden fees

Capital at risk.

Uphold

Uphold

Trade between 30+ cryptocurrencies and national currencies in one easy step
0% deposit and withdrawal fees plus 0% trading commissions and low spread
Set up automated recurring trades and up to 50 limit orders without fronting any money

Capital at risk.

Coinrule

Coinrule

Buy and sell cryptocurrencies with automatic ‘rules’
Set custom automated trades and never miss a rally or get caught in a dip

Capital at risk.

How can I buy cryptocurrency in the UK?

Buying cryptocurrency is a lot easier than most people think. Just follow these steps to get started.

1. Set up a wallet

The first step is setting up a wallet that supports the type of crypto coin you want to purchase. I’m going to use Coinbase as an example wallet. Visit Coinbase and download the app, then follow the steps to set up your account.

Verify your identity

You will need to verify your identity in the follow steps:

  1. Open the app, and select the menu in the top left hand corner (three stripes)
  2. Select “Profile & Settings”
  3. Tap Enable send and receive at the top. If the option is not available, go to the Coinbase document verification page.
  4. Select your document type which can be either a passport, Government-issued photo ID like your driving licence
  5. Follow the prompts to upload your ID document.

Verify your mobile number

You will also need to verify your mobile number. Do this by following these steps:

  1. Select the menu again, and click on “Profile & Settings”
  2. Under Accounts, tap Phone Numbers.
  3. Select Verify a new phone number.
  4. Enter your phone number then tap Next.
  5. Enter the verification code sent to your phone

That’s it. You’re all set up. The process should take a few minutes to verify your Coinbase account

2. Buy your cryptocurrency

Once you have your Coinbase wallet, you can buy Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), and Bitcoin Cash (BCH) and a few others.

Before you buy any cryptocurrency, do your own research (DYOR) first!

Using the Coinbase app, follow these steps to buy cryptocurrency:

  1. Tap on the two-way arrow at the bottom middle of the app
  2. Select “+ Buy”
  3. Then select the crypto asset you’d like to purchase, e.g. Bitcoin BTC
  4. Enter the amount you’d like to buy, which is shown in crypto or your local cash currency
  5. Choose either ‘one time purchase’ or one of the other options
  6. Select Preview Buy to review your purchase
  7. If all the details are correct, hit the Buy now button to complete your purchase

If you want to make this a recurring purchase, select “One time purchase” and select how often you’d like the purchase to repeat.

What is the minimum amount you can buy crypto on Coinbase?

You can purchase or sell as little as £2, $2 or €2 on Coinbase, whichever is your local currency.

Where is the best place to buy cryptocurrency in the United Kingdom?

Coinbase

Coinbase Pro

If you’re looking to buy bitcoin or other cryptocurrencies with the British pound, Coinbase Pro is an excellent way to start.

One notable feature of it is that historically it has been one of the cheapest ways to buy bitcoin in the UK through bank transfer.

Coinbase was one of the first major crypto exchanges to be granted an e-money license. While these are more commonplace now, this was a big deal a few years ago, so you can be sure that you’re in safe hands.

Coinbase Features

This cryptocurrency exchange also offers Faster Payments, meaning that you can use your bank account to deposit GBP right into Coinbase. This means that you can transfer money to your account very quickly.

You’ll also be able to buy and sell bitcoin at a reasonable rate without incurring high fees for your transactions. This is obviously beneficial as it means there will be fewer trading fees eating into your profits.

However, compared to some other sites, this cryptocurrency exchange may seem somewhat intimidating, but if you can get past that then it can be a useful trading platform.

Coinjar

Coinjar

If you’re new to trading cryptocurrency, CoinJar can be a great way to start as its simple and intuitive interface makes it very easy for beginners to use.

This is a cryptocurrency broker that was founded in 2013 and can be a good place to buy bitcoin and other cryptocurrencies.

Coinjar features

  • Whenever you use CoinJar, you’ll typically be charged a 1% fixed fee whenever you sell bitcoin or other assets.
  • Deposits into your crypto wallet are also often credited quickly, making it very convenient to use.

Kraken

Kraken

Another great platform for trading cryptocurrencies is Kraken, which lets you buy and sell crypto assets such as bitcoin at a good exchange rate with low fees.

Like with Coinbase, you can deposit money straight into your cryptocurrency wallets through a bank transfer, without incurring any fees or charges.

Kraken features

If you don’t want to have to wait, Kraken also lets you top up your account instantly by using a credit or debit card.

This is very convenient, but it’s important to note that this isn’t the cheapest way to buy bitcoin in the UK.

You may also want to bear in mind that whenever you want to withdraw any amount of bitcoin from your account, you will be charged. This fee is typically around 0.0005 bitcoin per withdrawal.

Luno

Luno

Similar to CoinJar, Luno is a UK-based cryptocurrency broker. With it, you can buy bitcoin and several other cryptocurrencies.

Luno features

When you deposit GBP into your account through a bank transfer, you’ll typically be charged a fixed fee of 1.5% when buying or selling bitcoin. These low transaction fees can be beneficial for growing your investments effectively.

However, while there are several different payment options, as you can also use your credit or debit card, it’s important to be aware that you’ll be charged a higher fixed fee of around 3.5% if you do this.

Gemini

Gemini

While it was founded in 2014, Gemini has only been available to UK customers since 2020. It allows you to buy bitcoin, along with a wide variety of different cryptocurrencies using British pounds.

Gemini features

When trading with Gemini, you’ll typically be charged a 1.49% transaction fee whenever you buy more than £150 of bitcoin at a time.

However, if you want to buy bitcoin in smaller sums than this, you may face higher charges.

You can top up your account with a GBP bank transfer for free, though it’s important to be aware that it can sometimes take a while for the sums to be added to your bitcoin wallets.

Furthermore, like with Luno, if you want to buy crypto with your debit card or credit card, you may be charged a higher fee of 3.49% on the transaction.

BC Bitcoin

BC Bitcoin

One of the most highly-rated cryptocurrency brokers, BC Bitcoin is a great choice for trading almost every cryptocurrency that you might want to trade. This platform not only supports bitcoin, but also a wide variety of other crypto assets.

BC Bitcoin features

You’ll typically be charged 4% in fees when you make a deposit through a bank transfer with BC Bitcoin. It is worth noting, however, that they do offer the option to use Faster Payments.

BC Bitcoin also offers a variety of payment options, including credit cards and debit cards, although you typically pay lower fees if you use a bank transfer.

It’s also important to be aware that there is a minimum order value of £250 when using this platform.

Is trading cryptocurrency legal?

One of the main concerns that many investors have is whether or not buying and selling cryptocurrency is legal and it is perfectly understandable why.

In recent years, cryptocurrencies have been launched into the mainstream largely thanks to the success of bitcoin. As you may remember, it first entered the news in late 2017 when bitcoin prices reached a peak of nearly £15,000 per coin.

However, there has been a considerable amount of controversy surrounding it, partly due to official concerns that criminals are using cryptocurrency transactions for money laundering purposes. This suspicion has made many people concerned about the legality of crypto exchanges.

Thankfully for tech-minded investors, trading cryptocurrency is absolutely legal in the UK and so you don’t need to worry about getting a knock on the door from the police any time soon! According to figures from the Guardian, more than 2.3 million Brits have some sort of crypto assets, as effectively anyone with a credit or debit card and an internet connection can buy them.

Is it safe to trade cryptocurrencies?

It’s important to note that while it is legal to buy and sell cryptocurrencies, they are not financially regulated products.

This can mean that your money often isn’t as safe with cryptocurrency purchases as it is when you’re trading traditional investments, such as buying stocks and shares.

Although there is speculation that the UK government and Bank of England may change their attitude towards the cryptocurrency market in the future, it’s important to be aware that there are no specific cryptocurrency laws in this country for UK users.

This can mean that trading them exposes you to a significant amount of risk.

Before you invest any money, it’s important to be aware that while there may be large gains to be made, investments into cryptocurrency come with an equally significant amount of risk.

This means that if your trades in the crypto market do not go well, you could stand to lose a large amount of money, so it’s important to think carefully before buying any.

Can I invest in cryptocurrency in the UK?

To answer simply, yes you can invest in cryptocurrency if you’re in the UK.

However, it’s important to remember that, as these assets are not yet regulated, they are something of a legal grey area. Of course, this may change in the near future.

Cryptocurrency and taxes

If you plan to invest in cryptocurrencies, it’s important to be aware of current tax legislation so that you don’t run into any unexpected issues.

You can check the government website to find out more about when you need to pay tax on your crypto investments.

What really is cryptocurrency?

While you may have heard the word “cryptocurrency” a lot, it may not initially be obvious what it actually is.

To put it simply, cryptocurrencies are digital currencies. Instead of having a physical form, units of these currencies are traded over networks that have two main properties:

  1. The first of these is that there is no central control over digital currency like there is with physical money.
  2. The second is that there is no central storage of transactions, such as a database that lists them all.

Instead, cryptocurrencies use “blockchain technology” to build a network of thousands of computers that process and store transactions together.

The sheer number of computers in the system (known as “nodes”) makes it difficult to have a common record of all sales and purchases.

This decentralisation is both one of the biggest advantages and disadvantages of cryptocurrency.

How does this decentralisation affect me?

On one hand, it means that transactions are very hard to monitor, making them popular with people who are concerned about government surveillance. This is why cryptocurrencies are also popular among some criminal groups.

However, the lack of central control can also pose problems if you are the victim of fraud, as you cannot be recompensed.

Without a central authority to monitor transactions, if a hacker or scammer steals any of your cryptocurrency, there is little you can do to get it back.

Why is cryptocurrency controversial?

Despite the popularity of cryptocurrencies among tech enthusiasts and investors, the Financial Conduct Authority has taken a cautious approach to them.

One of the main reasons for suspicion is that since the transactions are anonymous and there is no central record of them, they are popular with criminal groups for money laundering.

Since the government and financial regulatory authorities obviously want to prevent money laundering, as it often funds organised crime, they tend to take a sceptical approach.

Furthermore, some financial experts consider the risks of cryptocurrency trading to be too high to deem it a valid avenue for investment, although this view obviously depends on your own attitudes and tolerance to risk.

What are the advantages and disadvantages of buying cryptocurrency?

While investing in cryptocurrencies can seem like an appealing prospect, it’s important to think carefully about your decision before you act.

There can be a lot of factors to think about and so it’s important that you consider both the pros and cons of the investment before buying or selling.

Advantages

There can be many good reasons for retail investors to buy cryptocurrencies. Some of the most common reasons are:

The potential for large capital gains

One of the most obvious attractions of cryptocurrency is that the price has a tendency to fluctuate significantly.

While this means that your wealth is at risk if you buy in at a bad time, if you buy it at the right time then you may have the opportunity to increase your investment significantly.

A useful tool for seeing the history of many different crypto assets is the Coindesk website.

For example, if you had made the decision to buy bitcoin in 2014, the year that it was first launched, the price of one coin was around £200-250.

As of October 2021, however, the price of a bitcoin has surged to around £45,000.

The fluctuations in bitcoin’s price mean that you have the potential to make a considerable amount of money if you time your transactions correctly.

Anonymity

Another of the main attractions of cryptocurrencies is that all transactions are done anonymously.

While you presumably have nothing to hide, if you’re concerned about the prospect of government surveillance then cryptocurrencies can be used for online purchases.

As cryptocurrencies become more mainstream, more and more shops will let you purchase their goods using this form of payment.

You may remember Elon Musk’s announcement back in March, reported by the BBC, that people could buy Tesla electric cars using your bitcoin wallet.

While he later changed his mind, and you can no longer buy them in this way, it goes to show how much more accepted these forms of transactions are becoming.

If you want to know more about where you can use your cryptocurrency to purchase goods and services, the Retail Gazette recently published a helpful article on the topic.

Disadvantages

As I mentioned earlier, the main disadvantage of cryptocurrencies is that you can stand to make a considerable loss if your investment falls in value.

If things go wrong then you could stand to lose tens of thousands of pounds, if you are unlucky.

There are essentially three main ways that you could lose money when buying cryptocurrencies. These are:

1. The value plummeting

Cryptocurrencies are inherently volatile. As they aren’t linked to any physical goods or services, their price is simply determined by market sentiment.

If you buy cryptocurrency and its value falls, you may lose money when you come to sell it. This is known as “crystallising” your losses.

For example, if you had invested in bitcoin at the start of 2018, and then gone on to sell your assets on 31 December, you would have made a 73% loss.

This is a significant fall and goes to show how large your losses can be if you aren’t careful.

2. You lose track of it

Another significant risk is simply forgetting that you have it. While it sounds absurd to lose an expensive asset, this is actually more common than you think.

According to a report published in the Times, experts estimate that around 20% of all cryptocurrency has either been lost or forgotten about. This accounts for around $140 billion worth of assets.

Part of the problem is that since they are stored electronically in a “cryptocurrency wallet”, you may run the obvious risk of simply forgetting the password.

3. You lose it to cybercriminals

Another worrying possibility is that you could lose it due to cyber fraud.

As I mentioned earlier, cryptocurrencies are typically decentralised, so there is no central store of transactions.

While this is good if you’re concerned about surveillance, it can pose a serious problem if you’re the victim of cyber fraud.

If you’re the victim of normal fraud, whereby hackers gain access to your bank account, or trick you into making a fraudulent bank transfer, the centralisation works to your advantage.

This is because your bank is able to independently edit its database and records to change how much money you have in your account.

If you’re the victim of fraud, the bank can simply change your balance to what it was previously.

With cryptocurrency, since there is not the same central authority to monitor transactions (like with your bank transfers), if a hacker or cybercriminal steals any of your assets, there is very little that you can do to get it back.

What are cryptocurrency exchanges?

As it says on the tin, a crypto exchange is a platform that you can visit to buy and sell cryptocurrencies such as bitcoin (BTC) and ethereum (ETH).

They work in a similar way to an online stockbroker, except with digital currencies instead of traditional investments such as shares and bonds.

There are many cryptocurrency exchanges to choose from. However, if you want to maximise your profits, while also staying safe, you should look for a cryptocurrency exchange that offers both low fees and strong security features.

Typically, the best crypto exchanges will offer a variety of useful features like these, so it’s important to choose carefully which one you want to use.

How can I buy and sell cryptocurrency safely?

If you want to trade cryptocurrency in the safest way possible, there are essentially two ways to do so.

The first is to make sure that you trade through a legitimate and reputable exchange, or ideally through a brokerage. This can help to give you invaluable peace of mind that you’re in safe hands.

The second is to make sure your crypto wallet – the online space where your currency is stored – is secure. This can make it much more difficult for hackers to gain access to your account and, by extension, your crypto assets.

You could also consider a “hardware” wallet, which involves moving your wallet onto a physical, external device, such as an external hard drive or a USB stick. This prevents anyone from accessing it without the physical hardware.

Of course, if you lose your hardware wallet, you’ll lose access to your funds. Factor this into your decision.

While you can never fully discount the risk from cybercriminals, taking some preventative measures can go a long way in keeping your assets safe.

Do I have to pay tax when selling cryptocurrency?

As I mentioned earlier, cryptocurrency falls under something of a grey area when it comes to the law, as it isn’t a regulated financial product. However, to answer the question simply, you typically do have to pay tax when disposing of crypto assets.

You may need to pay Capital Gains Tax whenever you:

  • Sell your crypto assets
  • Exchange your them for another type of crypto-asset
  • Use your crypto assets to pay for goods and services
  • Give them away to another person (unless they’re your spouse or civil partner)

You may also need to pay tax if you donate any crypto assets to charity.

If you’re unsure of whether or not you need to pay tax on a transaction involving cryptocurrency, you can check the government website to find out more.

Is trading cryptocurrency right for me?

Trading cryptocurrency can be a highly lucrative investment strategy if it’s done right. However, if you are unlucky, you could stand to lose a considerable amount of money.

That’s why it’s important to be sure of your decision before you invest any of your wealth into cryptocurrencies. Investing in this way requires you to have a very high risk tolerance.

Alternatively, if you’re looking to grow your wealth but aren’t willing to accept such high levels of risk, there are a variety of other investment options you could consider.

For example, you may prefer to invest your money in Index Funds, Mutual Funds, or even Real Estate Investment Trusts.

If you’re unsure which of these might be right for you, you could benefit from seeking professional advice. Working with a financial advisor could help you to assess your risk tolerance and build an investing strategy that reflects that.

Please note:

Crypto assets are not regulated financial products so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.

This article is for informational purposes only and does not constitute financial advice. All contents are based on my understanding of HMRC legislation, which is subject to change.

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