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Learn how to buy and sell Bitcoin on crypto exchanges, Bitcoin ATMs and P2P platforms in the UK. Read on for our complete step-by-step guide.
Bitcoin trading has been a very popular activity in the investors’ world for over a decade now. It seems like as years go by, investing in cryptocurrencies is more and more widely accepted.
One of the countries that have accepted cryptocurrencies as taxable assets is the UK. Therefore, you can always get your hands on the number one cryptocurrency by market cap – as long as you pay your taxes.
So here, we will put our focus on how you can navigate the Bitcoin landscape by purchasing and then selling it. We will also walk you through the storage options you have, so let’s get started!
Let’s take a step back first. Bitcoin is the first cryptocurrency that hit the financial world after the economic crisis in 2008. Its launch sent shockwaves to the entire digital world as Bitcoin was presented as a decentralised digital currency, not issued by any state, government or central authority.
Instead, users themselves issue and distribute Bitcoin among themselves on the Bitcoin network. Fiat currencies such as the British Sterling depend on payment providers, banks and other various third parties for money transfers, Bitcoin is peer-to-peer.
Bitcoin goes around the traditional central authorities and places its trust in its users to maintain, hold and update their ledgers.
As you can imagine, the legal status of Bitcoin varies from one country to another, but buying Bitcoin in the UK is completely legal. There is a robust regulatory network in place in which cryptocurrencies are categorised as taxable assets by His Majesty’s Revenue and Customs.
Buying Bitcoin in the UK will trigger the tax reporting obligations with crypto transactions. Therefore, we urge you to maintain accurate records when purchasing BTC in the UK, so you make sure you are fully compliant with tax regulations for crypto gains and losses.
Keep in mind that the UK government does not recognize Bitcoin as a legal tender, unlike the British pound. For that reason, you must be fully aware of the risks that come with investing in Bitcoin – mainly its volatile status.
Just in September 2023, The Travel Rule of the UK mandates that UK-based crypto asset businesses need to collect, verify and share information on Bitcoin transfers. This is seen as a big hit to the decentralised nature of the cryptocurrency.
For this reason, no one should really be surprised to see that some big market players have since left the UK.
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step 1
Of course, you will first need to sign up at the given exchange and complete the necessary KYC procedures. Then, feel free to browse through the list of payment methods available – bank accounts, credit and debit cards are the most universally accepted options.
Please note that certain UK banks don’t allow their customers to use their credit cards for buying cryptocurrencies, so check this information before you decide on your next move.
Funds you deposit in your account are usually instantly visible, but some platforms may take up to a few days to receive the money.
Of course, you will first need to sign up at the given exchange and complete the necessary KYC procedures. Then, feel free to browse through the list of payment methods available – bank accounts, credit and debit cards are the most universally accepted options.
Please note that certain UK banks don’t allow their customers to use their credit cards for buying cryptocurrencies, so check this information before you decide on your next move.
Funds you deposit in your account are usually instantly visible, but some platforms may take up to a few days to receive the money.
step 2
After you fund your account, you can proceed with placing your first order for buying Bitcoin. The process may slightly vary from one exchange to another, but it should be straightforward:
After you fund your account, you can proceed with placing your first order for buying Bitcoin. The process may slightly vary from one exchange to another, but it should be straightforward:
step 3
A vital step you must complete is to safely store your BTC assets. Since crypto exchanges are not protected by the FCA, you must be wary of hacker attempts.
If you misplace your private key or recovery phrase, you risk losing any BTC coins you have. We will explain the storage methods in more detail below.
A vital step you must complete is to safely store your BTC assets. Since crypto exchanges are not protected by the FCA, you must be wary of hacker attempts.
If you misplace your private key or recovery phrase, you risk losing any BTC coins you have. We will explain the storage methods in more detail below.
Let’s now dive into your options for buying Bitcoin. All investors in the UK need to choose between brokers or exchange platforms through which they will buy BTC. Both enable seamless ways to get your hands on BTC, but you must make some distinctions between the two.
Even though the crypto landscape comes with good security features, choosing the best exchange or broker is a must, as hacker attempts are not uncommon.
Crypto exchange platforms in the UK operate without any formal regulation. However, the Financial Conduct Authority in the UK mandates that all crypto exchanges must be registered.
This doesn’t mean that you won’t be suffering from the drawbacks that come with Bitcoin assets. Given their extremely volatile nature, and the lack of government protection for cryptocurrencies, you must be very cautious before you buy BTC – even if you go through FCA – authorized providers.
A good piece of advice here is to diversify your BTC holdings across several exchanges, thus mitigating the risk of a single failure leaving you with nothing.
In addition, before choosing a crypto exchange, check whether it accepts BTC. The vast majority of platforms in the UK accept the largest crypto by market cap, but it doesn’t hurt to double-check and make sure.
Furthermore, you also need to be aware of the daily trading volume. If the exchange has adequate numbers here, it will guarantee much-needed liquidity for smooth BTC transactions. Fees are also something you need to keep an eye on, especially if you trade big volumes of BTC.
Since the new regulatory guidelines mentioned above came into practice, big exchange platforms such as CEX.IO and Binance announced that they have suspended onboarding new UK customers, so you won’t be able to use them for your everyday BTC trading.
Since Binance and CEX.IO are not available in the UK anymore, some investors may be worried about the options they have at their disposal, Well, not all is bad news, as you still have tons of exchanges to choose from. Let’s take a look at the biggest ones registered with the FCA.
The first name that pops up to mind is Coinbase – a BTC exchange platform that allows you to sell, buy and hold cryptocurrencies, NFTs and various DeFI products.
Besides Bitcoin, Coinbase supports over 240 cryptocurrencies, making it one of the most versatile exchanges out there. You can choose from the biggest coins like USD Coin Tether, Dogecoin and Polygon, but rare and niche coins are also at your disposal.
All users at Coinbase have access to a self-custody crypto wallet where you can store your assets and NFTs in one place.
Moving on, we have eToro – a multi-asset trading platform that allows you to invest in BTC, other cryptos, NFTs, ETFs, forex, etc.
eToro does not have a rich list of cryptocurrencies like Coinbase, but there are still over 70 available, so you will have plenty of Bitcoin alternatives.
Another attractive point about eToro is that it is ideal for newbies and experienced traders. The first group of investors will benefit from all the educational materials, easy user interface, copy trading tools, etc.
As for the advanced traders, they can take full advantage of eToro’s analytic tools, staking service, social trading, and crypto news.
Up next, we have CoinJar – a crypto app and exchange that works in the UK and Australia. CoinJar has over 50 supported cryptocurrencies, including Bitcoin.
In addition, CoinJar has an active card that lets you make purchases with crypto – anywhere where MasterCard is supported.
Finally, we have Uphold, one of the most beginner-friendly exchange platforms that allows you to trade with more than 250 cryptocurrencies. Apart from crypto transactions, all users can buy and sell up to 3 national currencies – including the GBP.
Just like CoinJar, Uphold has a virtual crypto card that works everywhere MasterCard is accepted. There are no transaction fees when using the Uphold card, and you can seamlessly link it to Apple Pay or Google Pay.
Besides crypto exchange platforms, you can also use crypto brokers to simplify your Bitcoin buying process. Note that some crypto brokers charge bigger transaction fees, while others may offer their services for free, in exchange for selling your data or executing trades at suboptimal market prices.
Sure, crypto brokers offer more convenient and simple BTC buying processes, but they can limit the transfer of crypto holdings from their trading platforms. Brokers can also restrict you from moving your BTC holdings to external wallets.
Well, due to the limitations that come with brokers, we suggest you use crypto exchange platforms for buying BTC. After you do so, the process would go as follows.
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Besides crypto exchange platforms and brokers, up until recently, UK residents had the possibility of buying Bitcoin through crypto ATMs. However, for all those wondering, the FCA imposed a ban on ATMs just in 2023.
You might still find some Bitcoin ATMs in the UK, but we advise you to stay away from them. Buying Bitcoin this way is illegal, so you might get into a lot of trouble when using unregulated ATM operators.
Worry not, even though Bitcoin ATMs are not available in the UK, you still have tons of alternative options to choose from.
First off, some UK banking and financial apps like PayPal, Revolut, Skrill and MoonPay allow users to buy Bitcoin directly through their platforms. Of course, you need an account on those platforms if you are to use their services.
Furthermore, you can use payment processors like BitPay to acquire BTC by seamlessly converting fiat currency into Bitcoin.
Lastly, a very prominent and widespread method of buying Bitcoin is through peer-to-peer crypto platforms. Examples of popular P2P platforms include CashApp and Paxful, and they enable you to directly agree on every detail of a crypto transaction with the other user.
Of course, you must be careful here, as you have limited legal protection with such platforms due to the way they operate.
We touched upon this subject above in the article, and we cannot emphasize enough how important it is to store your Bitcoin assets safely. For that, you can choose to store your assets directly in the crypto exchange platform – also known as a non-custodial wallet since the platform itself takes care of your holdings.
Exchange platforms fall under the hot wallets category, also known as software wallets. As the name itself suggests, software wallets are apps or web extensions that you can access from any device at any time.
You don’t need to worry about losing access to your wallets since the provider will always have recovery options in place.
As you may imagine, hot wallets have one big drawback – they can be prone to hacker attempts, as is anything that works online. That is where cold wallets come into the frame. Such wallets are devices that don’t run on internet access, so they are arguably more secure than their hot wallet compatriots.
Cold wallets will require your seed phrase to access your private keys, and they always come with a cost – some options like Trezor Model T and Ledger devices cost upwards of $200.
Before we take a look at the process of selling your Bitcoin assets, we can finish up this section by mentioning a few basic BTC concepts you must fully grasp:
Let’s say that you have some BTC holdings and you think that this is the right time to sell them, so how do you do that exactly? Depending on your preferences, you have plenty of ways to sell your assets, but all of them are straightforward. Let’s see the different ways to sell BTC.
Some hot wallets also work as digital platforms where you can sell your Bitcoin assets for fiat currencies, and the process of doing so is as simple as it gets:
If you already have an account at a crypto exchange platform, selling your BTC holdings is a walk in the park:
Since Bitcoin ATMs are not legal in the UK, the last option you have at your disposal for selling BTC is via a P2P platform, for which the process goes as follows:
Overall, we can say that no one can predict how the BTC price will develop in the coming years, but there is no running away from the fact that it is a very attractive investment opportunity.
It surely has the potential to be a very lucrative investment for UK citizens, but you always need to be wary of its volatile status.
Now that you have all the information you need about buying and selling BTC, choose from the options above and make your first investment!
Yes, one of the big drawbacks of buying Bitcoin from established UK exchange platforms is that you will need to go through a strict KYC process before you can make transactions.
Generally, if your card supports “3D Secure”, you will be able to use it for buying Bitcoin. However, some banks prohibit their customers from using credit cards for crypto transactions.
Unfortunately, since February 2023, Bitcoin ATMs have been illegal in the UK, so you will need to search for alternative methods.
Well, all options have different advantages and drawbacks, but a general rule of thumb is that cold wallets are safer variants for your Bitcoin – especially if you have larger amounts.
Buying and selling Bitcoin in the UK is completely legal, but note that all cryptocurrencies are viewed as taxable assets.
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