Investing
TL;DR
Cryptocurrency assets are not regulated investments in the UK; they carry no FSCS protection and losses are not covered by the Financial Ombudsman Service. Firms offering crypto exchange or custody services must be registered with the FCA under anti-money laundering regulations. HMRC treats crypto as a capital asset: gains are subject to CGT, and the annual exempt amount is £3,000 for 2025/26. Staking, lending and DeFi income may be subject to income tax rather than CGT depending on the specific activity.
Key facts (2026)
- Crypto asset exchange and custody businesses operating in the UK must be registered with the FCA under the Money Laundering Regulations 2017; check the FCA's crypto asset register at register.fca.org.uk before using any exchange (FCA, 2026).
- HMRC treats crypto assets as capital property; gains on disposal are subject to CGT at 18 percent (basic rate) or 24 percent (higher/additional rate) for 2025/26, after applying the £3,000 annual exempt amount (HMRC crypto asset manual, 2025/26).
- Staking rewards, airdrops received as income, and DeFi lending returns are treated as miscellaneous income by HMRC and subject to income tax in the tax year received, not CGT (HMRC DeFi and staking guidance, updated 2024).
- The FCA's Financial Promotions regime was extended to cover crypto asset promotions from October 2023; firms communicating crypto promotions to UK consumers must be FCA-authorised or have their promotions approved by an authorised firm (FCA PS23/6).
- FSCS protection does not cover crypto asset losses; the Financial Ombudsman Service has no jurisdiction over unregulated crypto firms, meaning consumers who lose money through fraud, exchange failure or market losses have no regulatory recourse (FCA consumer warning, 2025).
FCA registration versus FCA authorisation: a critical distinction
Crypto firms in the UK operate under two different regulatory frameworks. FCA registration under the Money Laundering Regulations 2017 is required for any firm providing crypto exchange or custody services; this registration confirms the firm has passed anti-money laundering (AML) and counter-terrorist financing checks. It does not mean the firm is regulated as an investment firm, does not give consumers FOS or FSCS access, and does not confirm the firm meets conduct standards applied to financial services. FCA authorisation - a higher standard required for investment firms, payment institutions and banks - is separate and most crypto firms do not hold it. Before using any crypto platform, check its status on the FCA's crypto register specifically, not the main FCA Register used for regulated investment firms. An FCA-registered crypto firm is not the same as an FCA-authorised investment firm.
HMRC's CGT rules for crypto: the key concepts
HMRC's position, set out in its Crypto Asset Manual, is that crypto assets are capital property for UK tax purposes. Disposing of crypto - selling, exchanging for another crypto, using to purchase goods or services, or gifting (other than to a spouse or civil partner) - triggers a capital gains event. The gain is calculated as the disposal proceeds minus the allowable cost (the amount paid, including any fees attributable to acquisition). The pooling rules - which require you to calculate gains using the average cost of all units of the same crypto held, rather than on a last-in first-out or specific identification basis - apply to crypto in the same way as to shares. The £3,000 annual exempt amount for 2025/26 can offset gains before CGT is charged. Losses can be offset against gains in the same year or carried forward indefinitely against future gains.
Income tax on staking, airdrops and DeFi returns
Not all crypto returns are subject to CGT. HMRC distinguishes between capital gains (from disposal) and income (from crypto-generating activities). Staking rewards - crypto received for validating transactions on a proof-of-stake blockchain - are treated as miscellaneous income taxable in the year received at their sterling value on the date of receipt. Airdrops received as payment for a service or as part of a business activity are also miscellaneous income. DeFi lending returns - interest or fees received for providing liquidity to a protocol - are similarly treated as income. Once received and taxed as income, the crypto then sits in the capital pool with a base cost equal to the value on which income tax was paid; subsequent disposal is then a CGT event on any gain above that base cost.
Record-keeping requirements for crypto tax
HMRC requires crypto investors to keep records sufficient to calculate accurate gains and income for self-assessment. The required records include: the date and value in sterling of every acquisition and disposal; the fees paid on each transaction; details of any forks, airdrops or staking rewards received; and records of any crypto-to-crypto exchanges, which are taxable disposals even though no fiat currency is received. Most crypto exchanges provide downloadable transaction histories, but these may not include all the information needed for HMRC's pooling calculations, particularly for complex DeFi activities across multiple protocols and wallets. Specialist crypto tax software (such as Koinly, CoinTracker or Recap) can aggregate data from multiple wallets and exchanges and calculate gains and income automatically using HMRC's methodology.
The FCA's crypto financial promotions regime
From October 2023, the FCA extended its financial promotions framework to crypto assets. Any firm communicating a crypto financial promotion to UK consumers must either be FCA-authorised with the relevant permissions or have the promotion approved by an FCA-authorised firm holding specific financial promotion approval permissions. The promotions must be fair, clear and not misleading; they must include mandatory risk warnings; and high-risk investment promotions must include a 24-hour cooling-off period and a personalised risk assessment before the consumer can proceed. The FCA has taken enforcement action against multiple platforms that continued to direct promotions at UK consumers without complying with the regime, including issuing alerts against platforms on its consumer warning list.
How to assess a crypto exchange before depositing funds
Before depositing significant funds at any crypto exchange, check the following: confirm the firm is on the FCA's crypto asset register (not just the main FCA Register); review the firm's custody model (are your assets held in segregated wallets or commingled with the exchange's own assets?); check whether the exchange holds a cold storage reserve and publishes proof-of-reserves data; read the terms and conditions for what happens in the event of exchange insolvency (most terms confirm that crypto assets held by a UK exchange are not protected by FSCS and that customers rank as unsecured creditors in insolvency); and consider whether the exchange is subject to regulation in its home jurisdiction that provides additional consumer protection beyond UK AML registration.
Related guides
Frequently asked questions
Do I need to declare crypto on my tax return even if I have not made a profit?
If your total crypto disposals in the tax year exceed four times the annual exempt amount (£12,000 in 2025/26), you must report them on a self-assessment return even if no tax is due, because of the requirement to report total disposal proceeds. If your total proceeds are below this threshold and you have no other reason to file a return, you may not need to report. HMRC also uses third-party data from exchanges to identify taxpayers with unreported crypto gains; always check your reporting obligation even for years where you believe no tax is due.
Is crypto legal in the UK?
Yes. Buying, selling and holding crypto assets is legal in the UK. Crypto is not recognised as legal tender, meaning merchants are not required to accept it as payment. Certain activities around crypto are regulated - advertising and exchange services - but ownership and trading are legal for individuals. The government has indicated it intends to bring more crypto activities within the FCA's full regulatory perimeter in future legislation, but as of May 2026 most crypto assets remain unregulated investments.
What happens if a crypto exchange I use is hacked?
If a crypto exchange is hacked and customer assets are lost, customers typically have no regulatory recourse in the UK if the exchange is only FCA-registered (not authorised as an investment firm). The FSCS does not cover crypto assets. Customers would need to pursue a civil claim through the courts against the exchange, or participate in any insolvency process if the exchange fails as a result of the hack. The risk of exchange failure is one argument for holding crypto in self-custody wallets rather than leaving significant amounts on exchange.
Can I put Bitcoin in my SIPP or ISA?
No. HMRC does not permit crypto assets to be held in a Stocks and Shares ISA or a SIPP. The permitted investments in ISAs are defined by HMRC and currently exclude crypto assets. SIPP rules similarly prohibit most non-standard assets that HMRC classifies as 'taxable property' or that fall outside the permitted investment list. Some SIPP providers offer exposure to crypto through listed exchange-traded products (ETPs) that track crypto prices, but these are indirect exposures and themselves carry specific risks.
Do I pay CGT if I give crypto to a friend?
Yes. Gifting crypto to anyone other than your spouse or civil partner is treated by HMRC as a disposal at the current market value, triggering a CGT calculation on any gain above the base cost. Gifting to a spouse or civil partner is exempt from CGT (the recipient takes on your original cost basis). Gifting to a charity is not subject to CGT and the gift may also qualify for income tax relief under Gift Aid rules if structured correctly.
How we verified this guide
FCA crypto asset registration requirements were confirmed from the FCA's crypto asset register and the Money Laundering Regulations 2017. HMRC CGT rates and crypto asset manual guidance were verified for 2025/26. FCA financial promotions extension to crypto was confirmed from PS23/6. HMRC staking and DeFi income guidance was confirmed from HMRC's updated DeFi guidance published 2024.
Primary sources
- FCA Register - Crypto asset firms
- HMRC - Crypto assets tax guidance for individuals
- FCA - Crypto assets consumer information
- MoneyHelper - Cryptocurrency investing
- Citizens Advice - Investment risk guidance
Last reviewed: May 2026.