You must have come across different guides on buying Bitcoin in the UK. However, they are not very comprehensive.
This detailed article guides you through the process of purchasing Bitcoin in the UK, highlighting where and where to use your Bitcoin and other things you should know before you invest in Bitcoin in the UK.
Let’s get to it!
Table of Contents
Is Bitcoin Trading Legal in the UK?
The UK has not laid out any cryptocurrency governing laws. Cryptocurrencies are considered to have a unique identity that is incomparable to other kinds of payment. A brief by HNRC indicates that cryptocurrencies are taxed only when involved in activities and with parties that require taxation.
However, cryptocurrency exchanges require registration and authorization from the FCA – Financial Conduct Authority – emphasizing those that deal with other financial entities like options and futures.
As of 6th January 2021, the FCA enforced a ban on the trade of crypto derivatives and ETNs (Exchange Traded Notes) that act as references for some crypto assets in a retail market. Trading these types of crypto assets is very risky, so the UK regulators chose to limit their trade to protect the retailers.
This ban doesn’t stop UK investors from trading other cryptocurrencies as the FCA targets the products that allow you to earn in the market but are not established cryptocurrencies. We expect more laws to be installed in the future as the crypto market continues to grow.
Bitcoin & Cryptocurrency Trading in the UK
Trading Bitcoin or other cryptocurrencies in the UK has become quite tricky, especially for those who want to start investing in cryptocurrency. This is because of the recent ban on crypto derivatives.
Retail investors are not allowed to buy crypto derivatives, which would be a quick way to explore and gain exposure to the crypto world before purchase real assets.
The best option now is to dive right in, buy the actual Bitcoin through a cryptocurrency exchange and hold it in your secure wallet for sale later. Some of the UK’s popular Bitcoin exchanges include eToro, Coinbase, Binance, BitMEX, CEX.IO,Bitpanda, and many others.
Regulation of Bitcoin Trading
Investors in the UK can buy and sell cryptocurrencies, but a recent regulation limits the buying and selling of crypto assets such as CFDs.
The Cryptoassets Taskforce, which is made up of financial authorities in the UK – Bank of England, HM Treasury, and the UK’s FCA – take charge of the regulations to manage cryptocurrencies in the UK.
It considers the different types of business models, the broad range of functions that crypto-assets can accomplish, and the difference in entities to come up with regulations.
The Taskforces seeks to:
Maintain transparency and security in the financial sector and thus keep the UK’s reputation intact.
Protect the investors from frauds and scams.
Keep high standards in regulating the financial sector.
Set guiding rules that every investor can follow and remain safe in the market.
Best Places to Buy Bitcoin & Crypto in the UK
To choose the best place to buy your Bitcoin and other cryptocurrencies, consider factors like security, simplicity, and ease of use, trading fees, customer service, and local deposit options. If you are a beginner, you’ll prefer one which is favorable and easy to use.
This article will discuss the two best cryptocurrency exchanges where you can buy Bitcoin efficiently in the UK.
It operates in the UK as eToro UK Ltd, and it’s quickly gaining popularity as the best social trading broker. With the millions of people using it to trade, you can tell that people trust it completely. The regulation by FCA helps to strengthen this trust.
Investors enjoy the eToro services on the web and the app. The interfaces have a simple design, and users can easily navigate through them.
You’ll need to create an account with eToro, and verify your identity before trading cryptocurrencies. Immediately after opening an account, you are granted access to a demo account where you can practice, observe the market, and also familiarize yourself with the assets.
After its official launch in 2012, Coinbase has continued to gain popularity among UK residents and become the most preferred platform to trade Bitcoin and cryptocurrencies. It has a simple interface that users enjoy, even beginners.
Coinbase offers a secure Coinbase wallet which is an ideal storage space for your Bitcoin and crypto. If you want to do things at a more advanced level, you can choose to use Coinbase Pro.
Today (time of this writing), the price of one Bitcoin is 39, 035.40 Pound Sterling.
The price of Bitcoin rises and falls throughout, thanks to its high volatility. Please check to confirm the updated price.
Cryptocurrency Scams in the UK
Cryptocurrency scams are easy to propagate because of the unregulated nature of crypto operations. The police in North Yorkshire recently issued a report of how scammers got away with over £300,000 collected from the unsuspecting investor.
The scam was well planned as the perpetrators claimed to work for Bitcoin investment companies that offer trading services. The investors were required to download trading software that would conduct trades for them when in reality, the scammers were seeking to get access to the investors’ computers and bank accounts.
With the access granted, they could rob innocent, unsuspecting investors and get away with their money.
Another scam involves a Ponzi scheme that requires users to refer others before accessing their money and making profits. They follow in the footsteps of the famous MMM scam in Russia. If you come across a crypto assets provider that requires you to have referrals first, stay away from it.
To avoid falling victim to such cases of scamming incidences, ensure that you:
Check if the company has been listed as an untrusted company on the warning list created by FCA.
Make cryptocurrency investment decisions when you are calm and under no pressure from other traders. If you feel unsure of your decision, you can seek professional guidance and make an informed decision.
Block any attempts by anyone trying to gain remote access to your digital devices like your computer.
Trade on authorized exchanges and crypto asset providers which FCA register.
Please stay away from crypto products promising incredibly high returns within a short time, as they could be scams.
The UK’s financial regulators have enforced a ban on the trade of crypto derivatives in a bid to reduce the scamming incidences and protect the investors. FCA has come out to warn crypto enthusiasts of the risks involved and charge them to be very careful while making investments.
Bitcoin Mining in the United Kingdom
Bitcoin mining, however tedious, can a profitable venture depending on an individual’s circumstances. For example, some choose to mine Bitcoin using the ASIC Bitcoin mining machines, which use a large amount of electricity to mine one Bitcoin. This makes this approach quite expensive and unfeasible for ordinary investors.
However, miners have opted to mine other coins because they require less electricity, and the mining process is less tedious. They can choose to store the coins as they are or convert them to Bitcoins. This method allows miners to reap huge profits in ordinary circumstances.
If you are looking at mining Bitcoin specifically, you’ll need to have access to very cheap electricity so that you can make a profit from it. However, in the UK, power costs at an average price of 14.37 pounds per KWh, which is quite expensive.
Bitcoin Popularity in the UK
The FCA annual report on cryptocurrencies reveals a surge in the number of people investing in cryptocurrencies. Amid the Covid-19 pandemic and the lockdowns, millions of people sought refuge in the cryptocurrency financial structure that appeared more stable than the weakening local currency.
In recent months, the price of Bitcoin has been rising, hitting its all-time high price at $50K. The price may continue to grow, and therefore, many people are jumping into the Bitcoin wagon for fear of being left out.
According to FCA, many more people are expected to invest in cryptocurrency. That’s why this financial regulatory body is working towards establishing laws that will help keep UK residents safe from fraud.
Where Can I Use Bitcoin in the UK?
Now that you have the Bitcoins with you, are there places you can use them? There is a notable rise in the number of places where you can use your Bitcoin in the UK.
Here are some of those places:
Gift Off – At Gift Off, they accept Bitcoin as payment in exchange for vouchers and gift cards accepted by most retailers. For example, you can buy Amazon vouchers which you can use to shop online.
Overstock – It’s an online retailer whose CEO loves Bitcoin. He advocates for Bitcoin as a payment method in the platform. This is a great place to spend your Bitcoin directly.
Microsoft – At the Microsoft offices, you can buy their products using your Bitcoin. This service is not available on the website.
Lush – If you love handmade, 100% vegetarian cosmetic products, lush is an option you should consider. The best part about it is that you can pay for all their products using Bitcoin.
AirBaltic – They accept Bitcoin as payment for your flight tickets. Surprisingly, they only accept such payment for the cheapest flight options. The good news is that their flights are distributed across Europe and the Middle East, so it’s a good option for your business trips within the region.
As cryptocurrency continues to gain traction, more places will adopt it as a payment mode, which will be an excellent step for Bitcoin holders.
Bitcoin ATMs in the United Kingdom
At the moment, there are over 16,000 Bitcoin ATMs all across the United Kingdom. This is made possible through a partnership between BitcoinPoint (a Cryptocurrency company) and Cashzone (a Cash machine operator that works independently). The Bitcoin ATMs are distributed across most major cities so that you can locate one near you.
To make a successful withdrawal at any ATM, you’ll need first to download the Bitcointpoint app and use it to perform the transaction. On the app, enter the amount you desire to withdraw and scan the QR code. A message is sent through the app with a pin code number. Enter the code in the ATM, and the transaction is complete within seconds.
How Does Brexit Impact Buying of Bitcoin?
Brexit (British Exit) refers to the withdrawal of the EU trading bloc. The vote was done in 2016, and the exit happened on 31st January 2020. In many ways, this action has affected the UK’s economic condition as the EU was its largest trading partner.
However, crypto analysts have a firm belief that Brexit will affect the crypto market positively as more people in the region gradually adopt cryptocurrencies. The UK is expected to take a direction that favors cryptocurrencies now that they are no longer under the rules and regulations from the EU.
As the price of Bitcoin is rising, the UK parliament is keen on making laws that guide the trading and the use of cryptocurrencies.
Summary - Best Places to Buy Bitcoin in the UK Instantly
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