As with many jurisdictions worldwide, the United Kingdom does not have a solid legal framework for cryptocurrencies. However, crypto-related activity is high. For example, the country ranks third worldwide based on the number of ICOs. But is it possible to buy cryptocurrency in the UK?
Yes, you can buy digital assets in the UK, but what is the process like? We acknowledge that not everyone is conversant on matters of cryptocurrencies and how to buy them. That is why we prepared this guide to take you through the process gently.
In the UK, you can buy cryptocurrency from an exchange or a broker. Your ultimate goal for buying and selling digital currencies will determine if you select an exchange or the latter. But what is the difference between the two?
A cryptocurrency exchange sells actual tokens. For example, Coinbase delivers an actual Bitcoin token into your private wallet at the end of a purchasing process. You can use the tokens later to settle transactions or sell at a profit. First, however, you must store the tokens in a wallet. Some exchanges offer crypto custody services, but some buyers opt to hold the tokens in their private wallets.
On the contrary, a broker sells financial products that track cryptocurrency prices. An example of the product is CFDs or contract for differences. For example, a Bitcoin CFD tracks the token’s price relative to another cryptocurrency, i.e., USDT/BTC, or relative to a fiat currency, i.e., GBP/BTC.
The CFDs, also called derivative products, do not involve actual tokens. For instance, the broker pays you in cash when you earn a profit. This means investors do not have to worry about how and where to store tokens. Some investors find CFDs better because of convenience and liquidity. Others view actual tokens as an asset for long-term investing.
So, where do you buy Cryptocurrency in the UK? We have provided you a list of platforms that we believe offer the best services. They are listed below.
The cryptocurrency space in the UK is vibrant and still growing. However, we are aware that not everyone knows where and how to purchase digital currencies. In this section, we explain how to buy cryptocurrency in the UK in five steps.
For some reason, you have decided to enter the cryptocurrency market. However, you may not find the appropriate platform if you are not clear on what you want.
For example, if your reason for buying the token is short-term exposure, then a broker is the right platform. The platform offers cryptocurrency CFDs trading, allowing investors to get in and out of the market even for less than an hour.
On the other hand, if you are a long-term investor, then an exchange is the place to go. After buying the coins, you might want to keep them in a private wallet if you wish to retain total control.
No matter the platform you select, we suggest that you always look out for regulated businesses. This is because a licensed platform is a legitimate business, which prevents you from fraudsters. Also, a regulated trading platform must adhere to relevant laws, including laws that protect clients like you.
Brokers and exchanges can only serve you after you register with them. This helps them to give you an identity that will facilitate your online interactions. Creating an account is straightforward. First, go to the registration area and provide the necessary details – usually your full name and an email address or phone number.
All regulated trading platforms are obligated to verify the identity of their customers. As such, you will be required to supply copies of identification documents and sometimes a recent utility bill to verify the provided address. This verification process, also called KYC or know-your-customer process, helps the platforms avoid onboarding money launderers and other criminals.
Usually, a brokerage account requires funds to operate. Thankfully, the trading platforms in the UK support a wide range of payment providers to satisfy different tastes and preferences. The funding process begins when you hit the “Make a Deposit” button on the trading platform. Then, the platform will provide helpful prompts to guide you through the funding process.
Contrariwise, most exchanges support direct transactions from your bank account, so no need to deposit funds.
A funded account is ready for trading. On the broker’s trading platform, navigate to the trading section and select the appropriate cryptocurrency pair. For example, most brokers in the UK offer crypto pairs that include the GBP.
On the other hand, exchanges allow you to make spot purchases.
However, the differences between brokers and exchanges in the UK are not black and white. This is to say some brokers like eToro offer spot purchasing services, while some exchanges like Binance allow cryptocurrency options and futures trading.
Once the exchange fulfills your purchase order, you will have to choose whether to let the coins stay on the platform or send them to a private wallet. For example, you could leave the coins on the platform if the exchange offers staking services.
If you opened a position in the cryptocurrency market, it makes sense to erect a hedge. Hedging a trading position entails using risk-management tools to prevent unintended loss. You could also instruct the broker to exit the market when the price touches a certain level. This is possible using a take-profit or stop-loss order.
What is the Best Payment Method for Buying Cryptocurrency in the UK?
Your choice of a payment method depends on factors such as security, transaction speed, convenience and affordability. Since each one of us has unique preferences, the definition of “best,” in this case, is entirely subjective.
As mentioned earlier, the UK is the global headquarter of finance, and every payment method imaginable is available.
Buy Cryptocurrency with Cash: cheapest means for buying crypto anonymously in the UK.
Buy Cryptocurrency with Credit Card: vendors offer instant crypto purchase services with credit cards.
Buy Cryptocurrency with Bank Transfer: most secure payment method supported by all platforms.
Buy Cryptocurrency with PayPal: not all platforms support PayPal, but clients enjoy top-notch convenience for those that do.
Buy Cryptocurrency with Bitcoin: most exchanges accept Bitcoin for other digital currencies.
Cryptocurrencies exploded onto the global scene after Bitcoin caught the attention of the masses. Despite their popularity, cryptocurrencies are not likable to authorities in the UK. Nevertheless, the potential of the new money to solve the problems of legacy finance keeps attracting new believers. For example, new figures estimate that 2.3 million Britons own digital currencies, up from 400,000 in 2020.
Why exactly are cryptocurrencies attractive? It could be technology. Cryptocurrencies run on a blockchain network, a distributed ledger maintained by a network of nodes or computers. The network is secure, and transactions are cheap and seamless because the technology obviates the need for central authorities.
During the coronavirus pandemic that spawned lockdowns worldwide, the value of cryptocurrencies skyrocketed. For instance, the price of Bitcoin rose 606% between July 15, 2020, and April 4, 2021.
Bitcoin 1-year price chart Source: CoinMarketCap
More adults in the UK are getting to know cryptocurrencies because of the extensive media coverage of the massive bull run. For instance, 73% of the adults in 2020 had heard about digital money, compared with 78% at the time of writing.
Exponential rallies, such as the most recent one that peaked in May, make investing in cryptocurrencies an attractive proposition. But that is not all. Digital currencies have great potential to upend almost all industries today, as well as spawning new ones.
For example, the ecosystem has given rise to decentralised finance (DeFi). According to DeFi Pulse, the total value locked in DeFi projects over the past year grew from $2.52 billion to $53.46 billion at the time of writing. The value peaked at around $90 billion in May 2021. Simply put, there is great potential for cryptocurrencies to rule tomorrow’s finance, which makes investing in the assets today an intelligent move as per some veteran investors.
The UK does not have specific cryptocurrency laws, but regulators do not prohibit their sale. In 2020, the Financial Conduct Authority (FCA) labelled cryptocurrencies as property, which seemed like a step towards official recognition of the industry. The Bank of England does not deem cryptocurrencies to be money; hence the assets are not a danger to the country’s banking system. Perhaps this is why the authorities are approaching the sector in a measured manner.
A few businesses around the UK accept cryptocurrency as money, although most of them are small and little known. They include CarReg.co.uk, Diamonte Jets, Project D, etc. However, there is a high likelihood that big-name brands have stayed away from accepting crypto as currency because of a lack of official recognition. Also, big banks like HSBC refuse to facilitate crypto-based transactions.
Nevertheless, digital currencies are a common feature in video games. As more people interact with the tokens and the government unveils concrete regulations, there is a chance that crypto will gain money status.
Additionally, at the time of writing, there were 194 cryptocurrency ATM’s in the UK. All of the tellers accept the conversion of cash into Bitcoin and vice versa. A few of the ATMs accept tokens such as Ethereum, Monero, Litecoin, Thther, Ripple, Dogecoin, Zcash, Dash, and more.