How to Invest in Cryptocurrency in the UK

These crypto exchanges are an option Centralized exchanges (CEXs) are the preferred way of investing in cryptocurrency in the UK because of the convenient services provided. Crypto exchanges like Coinbase and Binance connect traders together using an order book system, which is displayed in the trading software. CEXs ensure that investors of all calibres are welcome by providing specific methods to buy cryptocurrency. Beginners will find the instant buy or convert feature easy to understand, while experts can use spot trading with indicators and trading tools.

Furthermore, cryptocurrency exchanges provide many investment activities once you have bought crypto. Staking is the most popular since it doesn’t require much effort to get started, and the rewards are great depending on the crypto. Alternatively, you can lend or mine crypto using the crypto exchange.

Best Centralised Exchanges in the UK

Cryptocurrency brokers are perhaps easier to get started investing in cryptocurrency in the UK since they feature simplistic trading interfaces and fast sign-up times. However, brokers issue CFDs (contracts for differences), a derivative product, instead of selling real crypto. This means you’ll be able to invest in your desired cryptocurrency without actually owning it. Also, crypto brokers don’t offer many features you’d find on other investment platforms, like staking and cryptocurrency withdrawals. eToro is the only exception, offering these services.

A huge advantage of brokers is they specialize in multiple markets. Therefore, you can diversify your portfolio with crypto, stocks, and commodities. We listed below the best crypto brokers in the UK you would like

Best Cryptocurrency Brokers in the UK

Decentralised exchanges (DEXs) are perfect when looking for an option to buy cryptocurrency anonymously. DEXs have no sign-up process, nor do they require user identification to trade. They function autonomously using smart contracts and community support, which is done by utilizing liquidity pools. Also, this means DEXs are not regulated, so you should only use popular platforms that have been verified to be trustworthy.

Swapping tokens is straightforward with a DEX since many provide a simple conversion service. Moreover, like CEXs, decentralized crypto exchanges allow staking and crypto lending, so you can earn interest on your crypto.

Best Decentralised Exchanges in the UK

Peer-to-peer services let you buy cryptocurrency directly from the seller and avoid third-party platforms like exchanges. The seller will list the coins they’re selling and at which price. Also, you will see the minimum and maximum amount you can buy cryptocurrency with that seller. You can accept the terms or continue searching for a better deal. To ensure trustworthiness, the seller will have a profile disclosing their past trades. Alternatively, some P2P services will verify sellers.

Best P2P Services in the UK

ETPs (exchange-traded products) are securities you’d find on a stock exchange. The ETP provider will state how it's backed, usually with the same crypto. For example, Bitcoin ETPs are backed with BTC. VanEck and 21shares are great platforms for this investment style.

Moreover, you can indirectly invest in cryptocurrency in the UK by buying stocks associated with the cryptocurrency market. Below are a few companies you can invest in now with eToro.

• PayPal

• Nvidia

• Coinbase

More often than not, investors see a coin rise quickly and invest huge amounts because they want to get a quick buck or FOMO (fear of missing out) into buying. However, this is too risky because the coin can lose value at any moment. You should never invest more than you can afford to lose. There will always be opportunities in the crypto space and your livelihood is more important. Determine beforehand what you can put into crypto, and do not go over your predetermined budget.

Cryptocurrencies are taxed in the UK as income or capital gains. All Brits have a capital gain tax allowance of up to £12,300, so if you trade you won’t have to pay taxes until profits exceed this number. Unfortunately, tracking crypto trades and cryptocurrency transactions is frustrating, but it is required by HMRC (His Majesty’s Revenue & Customs). Therefore, we recommend using a coin-tracking service that can integrate with your selected crypto exchanges. Read our UK cryptocurrency tax guide for more information.

Many beginner investors will face volatility at some point as the crypto market is highly unstable. This is where the term “panic selling” comes in. Newbies will see the coin falling and sell their stack to prevent more “losses”. However, note that you do not lose money until you sell your coins.

To prevent panic selling, create an investment plan or use one of the many popular strategies like DCA or HODL. This prevents emotional trading and often results in better returns.

Although this tip is obvious, some beginners may confuse private and public keys. Public keys are like your IBAN or routing number that tells the money sender where to transfer funds, while private keys give access to your money. Hence you should never give out your private keys because your cryptocurrencies will get stolen. You should write down your private key and store it in a safe location that nobody else can access.