Crypto in the United Kingdom

If you’re reading this in 2023, then the writing is on the wall about worldwide crypto adoption no matter where you are. That includes the United Kingdom.

Spring is kicking in, the crypto space is blooming in the United Kingdom, as the number of individuals, businesses, and institutions holding crypto in their portfolios steadily rises. 

This article will discuss crypto in the UK, its status as far as legality is concerned, pertinent statistics about crypto ownership in the UK, and noteworthy recent developments in the regulatory landscape, particularly the UK government’s recent plans to regulate crypto asset ownership in line with its efforts to rein in the crypto industry and introduce consumer safeguards moving forward.

Is crypto legal in the UK?

As of this writing, the UK has no specific piece of legislation as far as cryptocurrency and digital asset regulation are concerned.

The burden of crypto regulation in the UK falls under its main financial regulator called Financial Conduct Authority (FCA), which governs retail and institutional financial services firms and ensures the integrity of British financial markets. It’s the FCA’s job to ensure that companies engaged in crypto implement the requisite anti-money laundering (AML) and combating terrorist financing as it does for traditional financial services companies.

Generally, cryptocurrencies and its related digital assets such as NFTs are viewed by HMRC as property subject to capital gains or income tax on a case-to-case basis rather than a “official currency” like the British pound sterling. 

And, as we will see in just a bit, the UK government’s stance on regulation is proactive instead of reactive, meaning the government is taking steps to set industry standards and inform individuals about the space’s inherent risks. 

There’s no better time to do it than now, considering the following statistics that indicate rising adoption and popularity.

What do the stats say?

The United Kingdom has a lot to be proud of as far as crypto adoption is concerned, with the UK accounting for the highest crypto transaction values recorded in the European continent, with as much as $233 billion (£190 billion) in raw transaction values from the period ending on June 30th 2022 – accounting for the world’s sixth-largest transaction value.

Moreover, based on blockchain data platform Chainalysis, the country has jumped four places up on the company’s Crypto Adoption Index of 2022, firmly ensconced in 17th place – and well within the top 20 countries in the world for crypto adoption.

The number of British cryptocurrency owners has increased by almost threefold by 2022, with the number rising from just 1.5 million Brits owning some crypto to well over 4.3 million, or roughly 6% of the population. If that isn’t anything but a clear indicator of the nation’s increasing adoption rate, we don’t know what is.

In addition, the number of crypto ATMs in the United Kingdom rose to almost 230 in 2022, the majority of which were situated in London (141 ATMs in the London Metro Area alone), followed by Birmingham, Manchester, Cardiff, and Leeds, respectively, indicating a concentration in the country’s financial capital. All in all, the UK ranked third behind only Canada and the United States as the countries with the most number of crypto ATMs at its disposal.

It’s as clear as day: the United Kingdom is at the forefront of crypto adoption in the European continent and among the world’s biggest movers and shakers in the industry. The UK is also the origin of various projects which are pretty popular among the crypto community.  

Recent regulatory developments

In February 2023, the United Kingdom formally laid out plans to regulate the crypto industry in an effort to rein in the lack of guardrails that lead to wanton disregard for ethical business practices that have bedeviled the space over the past year, contributing to the sensational collapses of prominent companies like FTX, Alameda Research, Celsius, and Terra.

The UK government is looking at implementing new rules on crypto lending to bring in the entire industry in line with traditional financial services firms, in line with its efforts to strike a balance between innovation and consumer protections.

Moreover, Chancellor of the Exchequer Jeremy Hunt separately announced that UK taxpayers will be required to report crypto assets on their tax forms separately. The move, slated to be introduced in the tax year ending in April 2025, is expected to generate an additional $12 million (£10 million) for government projects.

According to HMRC, the change will apply to capital tax gains forms, and payable when said crypto assets are sold at a profit.

Conclusion

There’s no question that blockchain technology is among one of the most exciting new innovative and connective technologies the world has seen in a long time.

However, the laundry list of failures and false starts in the industry have reiterated the need for clear and present guardrails in the sector. A regulatory regime that promotes innovation, inculcates trust, and protects investors can help the worldwide crypto adoption. 

And the rising mainstream interest in crypto in the UK and subsequent regulatory oversight is pursuant to and indicative of the country’s commitment to continue leading the charge as Europe’s largest crypto industry by size while establishing safeguards for everyone involved.

Want to know more about crypto projects in different countries? We have written about Germany, South Korea, Brazil, UAE, Australia, Nigeria, Mexico, India, Russia, Vietnam, USA, Switzerland, Portugal, Finland, Japan, Philippines, Iceland, Canada, Turkey and the Netherlands.