Is Cryptocurrency Legal in the UK?
Yes, Cryptocurrency is legal in the United Kingdom as of September 2025. Cryptocurrency is an ever-growing sector in the UK. The cryptocurrency market in UK is expected to reach a projected revenue of US$ 619.0 million by 2030. A compound annual growth rate of 11.1% is expected of UK cryptocurrency market from 2025 to 2030. Cryptocurrency is legal in the UK, but it is recognised as a property and not as a legal tender. Cryptocurrency can be bought and stored with no restrictions but you can’t make your payments with cryptocurrency rather than the British pound. In this blog post, we’ll be talking more and giving details about the cryptocurrency environment in the UK in 2025.
Who Regulates Cryptocurrency in the UK?
There are several regulatory bodies who deals with crypto regulations in the UK. The most prominent one is the Financial Conduct Authority (FCA). If your firm is engaging in cryptocurrency activities, it should be listed on the Cryptoasset Register list of the FCA. Copper, a company with offers of trading, storage and settlement of cryptocurrencies, said on December 2024 that it had withdrawn its application to be on the Financial Conduct Authority’s Cryptoasset Register after three years trying to get registered, according to the Financial Times. This shows our readers how important compliance is to be able to register with FCA and how many obstacles you may face during the process. The Money Laundering Regulations (MLR) of 2017 and the Financial Services and Markets Act (FSMA) of 2023 give the FCA the authority to regulate these companies. All of these regulatory bodies and legislations combine to create anti-money laundering (AML) and counter terrorism financing (CTR) regulation standards and keep consumers safe.
What Are the FCA’s Requirements for Crypto Firms?
There are many requirements that the FCA demands crypto firms fulfill to operate safely, the anti-money laundering efforts for crypto firms were started by the FCA in 2020. One of the most important is the AML and KYC procedures that should be implemented by companies to reach AML/KYC compliance. Politically exposed persons (PEPs) and sanctions screening in particular help reach these goals. Transaction monitoring is also required to make sure that no suspicious activity goes unnoticed. Your company is required to file Suspicious Activity Reports (SARs) after noticing suspicious activities. You should also comply with the FATF Travel Rule; it demands that you share sender and recipient details of a crypto transfer transaction. The FCA has also made efforts by setting up a dedicated team of staff looking to bring rogue crypto firms to book. Our Sanction Scanner experts are saying that since 2020, 50 crypto firms were shown to have put enough effort in regarding preventing financial crimes and reaching compliance.
What Are the Cryptocurrency Tax Rules in the UK?
In 2025, 24% of respondents in the UK said they were invested in cryptocurrency, up from 18% in 2024. It was the biggest year-over-year jump of any of the nations surveyed. Since this industry is growing rapidly, tax rules are decided accordingly. Tax rules depend on the type of activity your company is conducting in the UK. If you’re simply buying or holding crypto in your possession, you are not taxed. You will only get taxed if you get rid of your assets by means of selling or exchanging. These actions fall under capital gains tax and must be reported accordingly. Our readers who are mining crypto or staking should know that the gains they get are counted as income by the FCA. According to the regulations, income gets taxed at the time of receipt. The same can be said for airdrops and rewards. These fall under the income tax if they are connected to business activities.
| Activity | Tax Type |
| Buying and Holding | No Tax |
| Selling or Exchanging | Capital Gains Tax |
| Mining or Staking | Income Tax |
| Airdrops or Rewards | Income Tax |
What Is the Travel Rule and How Does It Apply in the UK?
The Travel Rule is implemented by the FATF as an anti-money laundering requirement for companies. The Travel Rule demands that the sender and recipient details of transactions are shared and kept, the same goes for crypto companies. In the UK, Virtual Asset Service Providers (VASPs) that deal with transactions of more than $1000 are required to abide by this regulation. The measures were put in place to monitor crypto transfers just like other bank payments.
What Are the Penalties for Non-Compliance?
According to the City of London Police, crypto featured in 66% of all reports received in 2024 by Action Fraud relating to investment fraud. This was a 16% increase from the previous year. Crypto related crimes are on the rise and your company should be ready to deal with fraudsters. So, what happens if your crypto company is failing at meeting requirements put in place by the UK regulatory bodies? The first consequence you may face is the large amounts of fines issued for non-compliance. Your company may get removed from the FCA’s Cryptoasset Register and legal action may follow since your non-compliance may be linked to financial crimes. Since the rules you’re not complying with are enforced by the FCA under the FSMA 2023, the consequences we’ve just talked about will most likely be coming your way in case of non-compliance.
What Are the AML and KYC Obligations for Crypto Firms in the UK?
On April 29, 2025, the UK Government published draft legislation under the Financial Services and Markets Act 2000, aiming to extend existing financial regulations to cryptoasset activities. The first obligation to follow according to AML/KYC requirements is customer due diligence. CDD demands that you verify identity, address, and ultimate beneficial ownership (UBO) of transactions and store them for a minimum of five years. Another regulation your company should follow is ongoing transaction monitoring. This feature is needed to find out if there are suspicious crypto activities within your company transactions. You should be in compliance with the TraveL Rule and collect sender and recipient details for transactions of more than £1000. One more feature to be cautious about is the filing of Suspicious Activity Reports (SARs) when your transaction monitoring checks bring back results of odd activity. Maintaining a risk-based approach where your customers are divided according to how risky they are will help your company focus on individuals and companies who are of higher risk. This action will help your company save resources and time. Policy updates make sure you’re not running behind in terms of compliance, and conducting audits is done to help systems remain active. The UK respondents of Gemini’s surveys in late 2024 voiced their concern about the UK’s need for a clear regulatory framework for digital assets. 49% of them stated that clearer government regulation would foster trust in them.
Tools to Simplify Compliance with Sanction Scanner
The regulations we’ve mentioned above for our readers ensure compliance for your company. If you’re looking to implement these features to your company, Sanction Scanner is the right tool for you. With our real-time screening service, the companies you’re looking to collaborate will be checked against international watchlists for sanctions and PEPs. Smart transaction monitoring feature of ours is one of the most important for your company. This feature tracks wallet activity and flags suspicious activities accordingly. What’s more is that our team at Sanction Scanner also handles risk scoring for dividing your customers and making sure you’re never not prepared for detecting financial crimes. With our tool’s API integration option, you can integrate all of these features into your already existing systems and automate whatever feature you want.
FAQ's Blog Post
Yes, cryptocurrency is legal in the UK. However, crypto-related businesses must comply with regulations set by the Financial Conduct Authority (FCA).
You don’t need a traditional license, but FCA registration is mandatory for certain cryptoasset activities. This is part of the UK’s AML and CTF regulatory regime.
The FCA supervises crypto businesses for anti-money laundering compliance. It ensures firms meet registration, reporting, and consumer protection standards.
Exchanging crypto for fiat or vice versa and providing crypto custody services require FCA registration. Businesses that fail to register cannot legally operate.
Crypto investments are not covered by the Financial Services Compensation Scheme. Therefore, investors may not receive compensation if a firm fails.
Yes, individuals and businesses must pay tax on crypto gains. HMRC treats cryptoassets as property and applies Capital Gains Tax or Income Tax accordingly.
Some UK banks restrict or monitor crypto transactions due to fraud risks. Policies vary, so users should check with their bank before transferring funds.
The UK government is working toward a comprehensive crypto regulatory framework. New rules may include stablecoin regulations and broader consumer protections.
