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How to Invest in Cryptocurrency in the UK

Figuring out how to invest in cryptocurrency in the UK? With crypto investment legal in Britain, you too can get in on the crypto market. Below we show you how to do so safety without getting hacked.

in this guide, we review five top crypto exchange which you can access from the UK. As well as detailing exactly how to invest in cryptocurrency in the UK, we also look at how cryptocurrency investing works in more details. Let’s get started.

How to Invest in Cryptocurrency in The UK – Quick Steps

  • Step 1: Open an accountCreate your account by providing basic information, choosing a username, and creating a strong password. 
  • Step 2: Deposit funds – Next, you must deposit funds into your account to begin trading. Choose one of the many supported deposit options and make a deposit. 
  • Step 3: Search for Cryptocurrency – Now that your account is funded, search for the cryptocurrency you wish to purchase. 
  • Step 4: Buy Crypto – The final step to buy a cryptocurrency is to enter the amount you wish to invest and confirm the trade.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

Where to Invest in Cryptocurrency in The UK

How to invest in cryptocurrency in the UK to suit your individual needs boils down to where you buy your coins. You can buy and sell cryptos with online crypto exchanges.  But what platform should you choose? You should choose a platform that is in line with your trading goals.

Of the best crypto trading platforms UK, here are five exchanges you should try out with good regulation and low fees.

1. eToro – Big Exchange With Top Cryptocurrency to Invest in

eToro is overall the best crypto trading platform to invest in cryptocurrency in the UK, offering a unique trading experience. Thanks to the platform’s social trading network, users can access a plethora of cryptocurrencies and unique features not found on other platforms. eToro gives investors an edge when it comes to trading through an array of features.

Invest in Cryptocurrency via eToro

eToro has a presence in over 140 countries and has 28 million registered users. This highlights the platform’s ability to appeal to various types of users. However, users must remember that eToro is not available in all jurisdictions. The platform was launched in 2007, initially focusing on forex trading. However, the platform quickly expanded its services to include cryptocurrencies as well.

eToro offers users a simple and intuitive design that makes it easy for users to trade and find what they’re looking for. The eToro app and website provide similar functionalities and features, facilitating the seamless transition from one platform to another. The platform offers over 70 cryptocurrencies, 3000 stock options, and 49 currencies. This selection of assets makes the platform extremely popular among users.

Security On eToro 

eToro is a highly regulated platform and goes out of its way to ensure the security of user accounts and assets. Sensitive information is secured using SSL encryption before it leaves the device, ensuring that data cannot be intercepted at any point. The platform also stores all assets in cold storage, further increasing security. Additionally, users on eToro can set up two-factor authentication to protect their accounts further.

Fees And Features 

eToro charges a flat 1% fee on all crypto trades in addition to charging a spread. Stock trades have zero commission, while CFDs have variable spreads. There is also no fee for ETFs and stocks, although ETFs may have their separate internal costs. The platform levies a $5 withdrawal fee, while the minimum withdrawal limit is $30.

eToro Crypto Trading Platforms UK

Any transfers off the platform are subject to a transfer fee, with eToro also levying a $10 monthly inactivity fee if an account has been inactive for over a year. Users must also consider a $75 transfer fee when transferring to accounts on other platforms.

As mentioned earlier, eToro offers a plethora of assets, including stocks, cryptocurrencies, ETFs, Forex, NFTs, and commodities. eToro’s Copy Trading feature makes the platform extremely popular with traders of all levels. Copy Trading allows users on eToro to mirror the trades of experienced traders on eToro. Users can also study trading strategies and implement them in their own trades.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

2. Crypto.com – Secure and Regulated Exchange For Crypto Newcomers

Crypto.com is a great place to start for those looking to invest in cryptocurrency in the UK. The exchange is trusted by millions of users across the globe and is a fully compliant and regulated crypto trading platform.

It offers users verified proof of reserves and insurance coverage on their deposits. It also provides a sign-up bonus for staking. The platform offers staking on 21 cryptocurrencies, allowing users to earn rewards for locking up their tokens.

Crypto.com Trading Platform

Regarding the number of cryptocurrencies on offer, Crypto.com shines with over 250 cryptocurrencies available to trade. Additionally, it also offers 20 major fiat currencies. Crypto.com’s offerings are at par with some of the biggest crypto trading platforms in the world.

When it comes to services and offerings, Crypto.com is comparable to exchanges such as Binance and Coinbase. Users on Crypto.com can access DeFi staking, an NFT marketplace, yield farming, educational and research resources, and a centralised exchange. The platform also offers a decentralised wallet and margin trading. Users are also eligible for 5% cash-back for all expenditures made using the Crypto.com card.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

3. Coinbase – How to Invest in Cryptocurrency in The UK and Earn Interest

Coinbase offers over 500 of the best crypto to invest in. Thanks to its simple yet powerful trading platform, Coinbase is an excellent choice for retail traders and beginners. All you need to get started on the platform is to open your account, which takes minutes, submit your ID for verification, and voila! You are ready to begin trading on one of the best crypto trading platforms in the UK.

Invest in Cryptocurrency via Coinbase

Coinbase allows you to invest in many major cryptocurrencies and supports multiple payment modes, such as debit cards and credit cards. However, the fees on Coinbase are on the higher side, with the platform charging 3.99% as fees. However, you can also deposit funds via a bank transfer. This does not attract a fee, but the payment takes a few days to reflect in your account.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

4. Kraken – How to Invest in Cryptocurrency in The UK with Advanced Options

Kraken is one of the best place to invest in cryptocurrency in the uk and the oldest crypto exchange in the world, beginning its operations in 2011. Since then, it has expanded its footprint and has a presence in over 190 countries. The platform is a favorite among individual and institutional investors when it comes to trading, thanks to its competitive prices.

Kraken crypto exchange

The Kraken platform supports over 200 cryptocurrencies including Bitcoin (BTC), Ethereum (ETH), Dogecoin (DOGE), Cardano (ADA), Polygon (MATIC), Litecoin (LTC), Polkadot (DOT), Solana (SOL), Stellar Lumens (XLM), Uniswap (UNI), and Sushiswap (SUSHI). Kraken also supports all major stablecoins, including Tether (USDT), USD Coin (USDC), and DAI, along with major fiat currencies.

Security On Kraken 

Kraken ensures the security of funds on the platform by adhering to strict security protocols. For example, it holds 95% of all client funds in cold storage and employs a secure version of 2FA that prohibits SIM verification. Instead, users must use dedicated authenticators such Google Authenticator.

Fees On Kraken 

Fees on Kraken vary depending on the platform used and the type of trades they enter. Prices on Kraken may be subject to a spread fee on the primary Kraken platform. Instant purchases attract a small percentage of the transaction and spread. However, fees are still generally above the industry standard, with an additional 1.5% fee imposed on crypto transactions and a 0.9% fee on stablecoin transactions. The platform also charges a credit/debit card processing fee of 3.75% + 0.25%.

Let’s look at Kraken Pro. Kraken Pro offers slightly lower pricing options than the primary Kraken platform. Pricing on Kraken Pro is based on the user’s trading value over the past 30 days. While fees are slightly higher, security features on the platform make it worthwhile.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

5. Binance – Popular Cryptocurrency Exchange with Huge Asset Portfolio

Binance trading platform offers investors a low-cost avenue for investing in crypto assets, allowing traders to buy and sell orders at just 0.10% per slide. This low commission rate applies to thousands of crypto markets, meaning traders have many options to choose from.

Additionally, the platform offers cryptocurrency savings accounts, along with a range of trading tools and features. Binance is also the world’s largest cryptocurrency trading platform, offering thousands of markets.

Invest in Cryptocurrency Via Binance

Despite the popularity and scale of Binance, there are several problems with the platform. The main issue is that the platform is being investigated in several jurisdictions, including the UK, where the FCA is investigating the platform.

Binance has had several run-ins with regulatory authorities because of a need for more transparency regarding the security of user information and assets. The platform also had to pay a record fine to the SEC, with CEO Changpeng Zhao also forced to step down.

Types Of Crypto Investing 

Investing in cryptocurrency is more than just buying and holding crypto. However, there are several ways you can purchase crypto. Purchasing crypto is the easiest way to gain exposure to cryptocurrencies and add them to your portfolio. However, when it comes to investing in crypto, there are several avenues you can pursue.

Buy Crypto Directly 

This is the most straightforward option available to you. You can choose to purchase crypto directly from a platform and store it in your wallet. This method allows you to buy almost all cryptocurrencies in the market.

Investing In Crypto Companies 

Investing in companies exposed to cryptocurrencies and other digital assets is the second option. Options to gain indirect exposure to cryptocurrencies include investing in crypto mining firms, mining hardware makers, PayPal, and Robinhood. All of these companies support cryptocurrencies in some capacity. Alternatively, you can invest in companies such as MicroStrategy, which holds a significant amount of Bitcoin on its balance sheet.

Crypto-Focused Funds 

Let’s assume you don’t want to invest in crypto companies. What are your alternatives? If you don’t want to invest in companies, you can invest in crypto-focused funds. With the approval of spot Bitcoin ETFs and the impending approval of spot Ethereum ETFs, the markets are embracing crypto like never before. You can also invest in index, futures, and cryptocurrency investment funds.

Become A Crypto Miner Or Validator 

This is the most direct way of investing in cryptocurrencies. As a crypto miner or validator, you can earn rewards in crypto. They can use this crypto as an investment or exchange it for another currency.

UK Cryptocurrency Investment Explained

Let’s assume you are looking to invest in crypto from an exchange such as eToro. Let’s look at the steps you must follow.

  • First, select which crypto trading platform you want to create your account on. Always choose a reputable platform that offers a large selection of cryptocurrencies. 
  • Next, create an account with the platform of your choice. To do this, you must provide personal information and verify your identity to complete the registration process. 
  • Once your account is created and verified, you can fund your account with fiat currency. Generally, most platforms accept USD. 
  • Next, decide which cryptocurrency you wish to buy. You can put all your eggs in one basket and purchase only one type of cryptocurrency or diversity and purchase various cryptos. 
  • Buy Crypto – Once you have chosen which cryptocurrencies you wish to purchase, place a buy order for them. 
  • After you purchase your crypto, it will be reflected in your trading account. You can store your assets with the trading platform or transfer them to your secure wallet.

Choosing A Crypto Exchange for Investing

There are several factors that traders must consider when selecting a crypto exchange These include your trading goals, assets supported, fees, security, and more. Let’s look at some of the most important factors you must consider when selecting a crypto trading platform.

Payment Modes 

Supported payment modes are crucial when selecting a platform. Users want to be able to deposit and withdraw funds quickly without any significant cost involved. This is why selecting a platform that has low or no deposit or withdrawal fees is crucial. Always choose a platform that supports many payment modes, such as bank wire transfers, credit cards, debit cards, and e-wallets. Most platforms also support direct crypto deposits. Some of the most popular payment modes are:

  • Advcash
  • Western Union
  • Wise
  • Faster Payment System
  • Bank transfer
  • International transfer (SWIFT)
  • Debit card
  • Credit card

Fees 

Fees are another crucial factor to consider when selecting a crypto trading platform in the UK. It is actually one of the deciding factors when choosing a platform. All users want a platform that charges low fees when trading. Fees are rather complicated on most platforms, with some having a confusing fee structure while others have a plethora of hidden fees. Traders must also consider deposit, withdrawal, inactivity, and conversion fees.

  • Conversion Fees – This is the fee levied when one asset, such as BTC, is converted into fiat currency. This fee is almost always charged by a platform. 
  • Deposit/Withdrawal Fee – This is the fee platforms charge to deposit or withdraw crypto. These fees generally depend on the payment mode being used. 
  • Inactivity Fee – Some platforms charge an inactivity fee if the user account is inactive for an extended duration. 

Fees can make a significant impact on the overall return on investment. This is why you must select a platform that has low fees and is also transparent about its fee structure.

Security 

Perhaps the most critical factor you must consider is security. Most major crypto trading platforms, including Binance, Coinbase, and Crypto.com, have suffered a hack. Most crypto trading platforms follow the Cryptocurrency Security Standard in tandem with other standards, such as the PCI DSS and ISO 27001.

Always select a platform that holds most of its assets offline in cold storage wallets and also has verified proof of reserves. This means the exchange will be able to withstand situations such as a bank run.

FDIC insurance is highly recommended when it comes to reviewing platforms. This means cash deposits are insured up to $250,000 per account in the event of an account breach. All regulated exchanges must have insurance for deposits.

Assets Offered 

The next factor that must be considered is the platform’s available assets. The best crypto trading platforms offer users hundreds of cryptocurrencies, NFTs, and other crypto-related products. Some platforms offer a limited selection of cryptocurrencies, while others offer a huge selection of assets. Always select a platform that provides a greater selection of cryptocurrencies on offer.

Supported Coins

However, there is a difference between cryptocurrencies for purchase and selling and crypto trading pairs. A trading pair has two components (BTC/ETH, BTC/LTC). Meanwhile, buying and selling means you are simply purchasing the asset using fiat currency. A platform may offer 1500 trading pairs but only 250-300 cryptocurrencies. You must remember this when selecting a platform based on its available assets.

Customer Support 

Customer support is crucial when selecting a crypto trading platform. While customer support was almost non-existent during the early days of crypto platforms, it has improved significantly, with most platforms offering users access to customer support.

Today, most platforms provide customer support through several means, such as chat support, email support, and on-call support. Users can also reach out to platforms via social media by messaging on platforms such as X, Facebook, Telegram, and others.

Some exchanges offer support through an email ticketing system. However, this method is ineffective, with customers sometimes having to wait weeks for a response.

Crypto Wallets 

A crypto wallet is crucial to purchasing or making a crypto investment. Choosing a secure wallet is vital because an unsafe one could lead to losing your funds. A wallet with a bad user interface could lead to you sending funds to the wrong address or having a bad user experience.

eToro Money Crypto Wallet

Some wallets have small screens with even smaller fonts and can be a nightmare to operate. Most platforms offer users a centralized and sometimes decentralized wallet. Most crypto enthusiasts and experienced users prefer using a decentralized wallet, as it brings greater control.

Crypto trading platforms generally encourage enabling 2FA on wallet transactions for added security. However, thanks to the risk of SIM swapping, most exchanges recommend using an authentication application.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

Read More: Best UK Crypto Wallets 2024

Understanding Crypto Investments 

All types of investments carry some risks, and cryptocurrency investing is no different. The difference is that the risks involved in investing in cryptocurrencies are significantly higher than traditional assets. That is why we recommend thoroughly researching the cryptocurrency markets before making your first investment. Remember, there are thousands of cryptocurrencies in the market, so a little research won’t hurt.

Once you have finished your research and chosen what cryptocurrency you wish to purchase, you can initiate the trade on the platform of your choice.

Overview of The UK Crypto Market And Regulations 

The UK’s favorable economic and technological policies have fostered the growth of crypto fintech services. Several Web3 and fintech startups are in the UK, making crypto more accessible to the everyday investor. With the number of crypto trading platforms operating in the UK, there is no lack of options for investors. The UK classifies cryptocurrencies as crypto assets and not legal tender and has put them under the purview of a Crypto Assets Task Force created in 2018.

However, the real authority lies with the FCA, the body responsible for crypto regulation in the UK. In 2019, the FCA created an official document, “Guidance on Cryptocurrency,” for investors to study. The guide defined four types of crypto assets:

  • E-money – E-money comes under the Electronic Money Regulations (EMRs) jurisdiction and refers to the digital representation of fiat money. 
  • Utility tokens – These tokens give the holder access to services powered by blockchain technology. 
  • Security Tokens – Security tokens represent tokenized financial assets or securities such as equity and debt-financing products. These products are subject to be regulated under the Regulated Activities Order. 
  • Exchange Tokens – These tokens are used primarily in trading and as a mode of payment. Examples of exchange tokens are your regular cryptocurrencies such as Bitcoin, Ether, Litecoin, and others.

The UK government is also bringing in a comprehensive law on crypto regulations, which should be ready in a few months. From a legal point of view, the FCA is proactively freezing suspicious transactions and has been given the authority to pursue legal matters related to crypto. Additionally, crypto derivatives are prohibited in the UK due to their high-risk nature.

Benefits of Crypto Investing 

In this section of our guide on how to invest in cryptocurrency in the UK, we will look at some of the benefits of cryptocurrency investing.

Decentralized and Finite 

Cryptocurrencies are decentralized, meaning no single person or authority controls them. Secondly, cryptocurrencies such as Bitcoin have a finite supply. Once Bitcoin’s supply hits 21 million, no new BTC will enter into circulation. Decentralization also means the cryptocurrency or its supply cannot be manipulated. This contrasts with fiat currencies, which generally suffer from inflation thanks to the rampant printing of money.

For example, in 2020, the Federal Reserve printed over $3 trillion to deal with the Covid-19 crisis. Similar measures were taken by other central banks, such as the European Central Bank (ECB) and the Bank of England, drastically increasing the supply of fiat currency. This led to a considerable increase in inflation.

In the UK, this has led to a cost of living crisis, leading to many questioning banking policies. On the other hand, cryptocurrencies are designed to be decentralized and deflationary instead of inflationary.

Market Returns 

Bitcoin’s value has surged from $100 to $69,000 over the decade. Bitcoin is not the only cryptocurrency that has seen such a staggering increase. Ethereum, Solana, Litecoin, Dogecoin, Shiba Inu, and others have also reported similar increases. In comparison, traditional investments have reported an increase between 1% and 10%.

While cryptocurrencies offer above-average returns, they also come with the risk of added volatility. However, this can be countered by investing in a diverse portfolio of cryptocurrencies and other asset classes.

Interest 

New traders are pleasantly surprised when they discover they can earn interest when investing in crypto. This is because your crypto can be used to fund loans with the borrower paying interest for the duration of the loan. Depending on the platform and cryptocurrency, interest rates can be pretty attractive. Binance, for example, allows users to earn an APY of 11% for locking their Polkadot tokens for 30 days. Some platforms pay even higher interest for some cryptocurrencies. However, most cryptocurrencies generally offer returns of 7-8%.

The Advantage Of Blockchain Technology 

The underlying technology that powers cryptocurrencies is called the blockchain. The blockchain allows data and information to be sent, received, and stored securely.

Blockchain technology has also found use in several other industries, such as finance, supply chain, the environment, healthcare, and more. One of the best examples is Ripple, which uses blockchain technology to enable banks to conduct cross-border transactions quickly and at a low cost. Ethereum also facilitates transactions in a trustless manner through smart contracts.

Market Entry Barrier 

Buying and selling cryptocurrencies is easier than many would like you to believe. However, the reality is that it takes minutes to invest in cryptocurrency through your trading account. Additionally, the crypto market is worth over a trillion dollars, meaning there is plenty of liquidity, allowing you to cash out your cryptocurrencies back to fiat.

However, you must comply with all requisite KYC and AML norms to quickly convert your crypto into fiat. In the UK, this can be done almost instantly via Faster Payments.

Investing vs Trading 

You can approach the crypto space in two ways: investing and trading. While both terms are sometimes used interchangeably, they represent two distinct things. Let’s understand each a little better.

Investing in Cryptocurrency 

When you invest in crypto, it generally means you are purchasing crypto as part of a long-term strategy. Long-term crypto investors generally HODL their assets for a year or more. The longer you hold on to your crypto, the better the chances of riding out periods of volatility. Investing in crypto is no different from investing in stocks and shares, with similar strategies and timelines.

Trading Cryptocurrency 

When you trade cryptocurrency, you use a short-term strategy compared to investing in crypto. Two types of trading strategies are available to traders: day trading and swing trading. Day traders will purchase a particular crypto and then sell their position before the close of the day. On the other hand, swing traders take a slightly longer approach, meaning positions can remain open for a few days to a few weeks.

Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

Crypto Tax in the UK

Taxes on crypto in the UK are similar to those in other regions like the US. If you, as a trader, make a profit from selling cryptocurrencies, you will be required to pay Capital Gains Tax. Let’s understand Capital Gains Tax with the help of an example. Suppose you purchase BTC for £30,000 and sell it for £45,000; you must pay Capital Gains Tax on £15,000. This is a crypto-to-crypto taxable event. If you sold the same BTC for ETH at the same prices, you would still have to pay Capital Gains Tax on £15,000.

However, if you receive compensation in the form of crypto, then it will be subject to the same rate of taxation as it is for fiat in the UK. If you are paid £4000 monthly, the total £48,000 will be taxed identically to £48,000 in fiat. However, you may have to account for Capital Gains Tax if you paid for any item using crypto or sold your crypto for fiat. The bottom line is that if your assets appreciate and you decide to cash out, you will owe taxes on the assets.

The government treats crypto staking and mining as a means of income under crypto regulation. However, this can be classified differently as a hobby or a business, similar to the regulatory framework followed in the US. On the other hand, holding crypto, sending it from one wallet to another, or giving it as a gift to another person are not considered taxable events.

How to Invest Safely 

The crypto space faces considerable risk from various threat actors such as malware, hackers, wallet hacks, exchange hacks, and more. These attacks have one goal: to steal crypto assets and launder the funds in the open market. This is why you must learn how to invest in cryptocurrency in the UK safely. Let’s look at some of the safety tips you must keep in mind when investing.

Fund Management 

Whether crypto or traditional, the best way of investing is to be mindful of how much you can afford to lose. Investments don’t have to be humongous. Investing smaller amounts and then investing more is perfectly okay as you get used to the intricacy of crypto trading. Additionally, many crypto platforms offer demo accounts where traders can test their trading strategy before implementing it.

Many professional traders implement strategies such as stopping loss to limit the amount they can lose and exit the trade as quickly as possible. A common rule of thumb is not to invest more than 5% of your overall investment capital in one trade.

Going by this rule, you must set aside a small amount and invest in the crypto of your choice through a secure and regulated platform. However, invest wisely and don’t fall for exorbitant claims in the hope of making more money.

Regulated Platforms 

Using a trusted and highly reputable broker is The best way to stay safe when investing in crypto. If you are based in the UK, you can select a broker that the FCA regulates. While cryptocurrency is unregulated, an FCA-licensed platform ensures that it is legitimate and credible. A regulated platform will also be required by law to keep your assets safe at all times.

However, traders must also be aware of the fact that a large number of crypto trading platforms are unregulated. These platforms bypass conventional market regulations by offering crypto deposits and withdrawals or by partnering with a third party for GBP payments.

Wallet Security 

As an investor, you must have basic knowledge of wallet security. This is vital if you want to withdraw your assets from the exchange to a dedicated wallet.

Risks Of Crypto Investments 

Anyone figuring out how to invest in cryptocurrency in the UK should consider the risk factors of investing. As we’ve mentioned earlier, cryptocurrencies are notoriously volatile. However, apart from volatility, there are several other risks you must be aware of when trading.

Volatility 

Volatility is the first major risk when it comes to crypto trading. It refers to the rapid and often substantial price movements experienced by cryptocurrencies daily or when there is a significant development in the crypto space. For example, when a US court ruled that Ripple (XRP) was not a token, the value of XRP surged by 61%. In the same week, crypto trading platform Coinbase registered an increase of 34%.

The ruling had broader implications for the market as it introduced legal and regulatory clarity on XRP and associated offerings. There are several reasons why the crypto space experiences significant volatility. The crypto space is relatively young and continuously evolving and lacks the established maturity seen in traditional markets. This makes it susceptible to market speculation and sudden changes in investor sentiment, reflected in rapid price movements. Constant government attempts to regulate the markets or statements by prominent individuals can also trigger price swings.

The decentralized nature of cryptocurrencies also contributes to volatility. The absence of a centralized body or regulatory authority and how easily users can access trading platforms enable widespread trading activity, which impacts prices significantly.

Hacks, Scams, Rug Pulls 

Hacks and scams pose a significant risk to the crypto ecosystem and its participants, significantly undermining user trust. The most prevalent types are phishing attacks and exchange hacks, which can siphon millions of dollars from user accounts in minutes. But what are exchange hacks and phishing scams?

Exchange hacks occur when hackers target crypto trading platforms and steal user funds. These hackers exploit vulnerabilities in the security system of trading platforms to steal funds, targeting user wallets or exchange wallets. Hacks and scams in the crypto space have cost billions, adversely impacting users and creating uncertainty in the crypto community.

Phishing is another risk faced by those in the crypto space. These scams typically involve a malicious actor impersonating legitimate entities such as platforms and tricking users into sharing sensitive information such as private keys, passwords, and other sensitive information. This occurs mainly through malicious links, fraudulent websites, emails, and social media accounts.

Insolvency 

One of the biggest risks in the crypto space is insolvency, highlighted by the recent collapse of FTX and many other projects. The FTX collapse sent the price of Bitcoin hurtling to a two-year low. This led to almost all other cryptocurrencies seeing a significant reduction in their price. A major exchange like FTX going bankrupt has significant implications for the rest of the market.

There is also the risk that the exchange holding your funds goes bankrupt. If this happens, you cannot get your money back because crypto deposits are not insured. Those who had accounts in FTX did not receive their money back and are unlikely to receive compensation.

Market Manipulation 

Market manipulation refers to the wilful action of individuals to manipulate the price or trading volume of a particular cryptocurrency for personal gain. Cryptocurrencies are particularly susceptible to market manipulation thanks to their decentralized and unregulated nature. One of the most common crypto fraud types is the pump-and-dump scheme. In a pump-and-dump scheme, the price of a cryptocurrency is artificially inflated through coordinated buying. This creates a buying frenzy among unsuspecting investors.

Once the asset price has risen significantly, those behind the scheme sell their holdings. This leads to the price crashing and investors facing heavy losses. The rug pull is another example of market manipulation in the crypto space. Here, a core team creates a token with the sole intention of duping investors and running off with the funds.

False information and rumors are also used to manipulate market sentiment. This includes false narratives about developments and partnerships pertaining to a particular cryptocurrency. This leads to investors buying or selling their assets based on false information. Wash trading is another example of manipulation where individuals trade among each other to create an inflated trading volume and market activity.

Regulation 

Crypto regulation has gained prominence recently as governments and regulatory bodies attempt to strike a balance between fostering innovation and protecting investors. Crypto regulations vary across markets. Some countries have embraced crypto and blockchain technology, enacting legislation to provide regulatory clarity. These regulations deal with KYC and AML, taxation, and licensing requirements.

UK Crypto Regulation

However, too much regulation can adversely affect the crypto space. For example, regulatory bodies can sue exchanges, as is the case with Binance, which is facing lawsuits from the SEC. They can also prohibit certain types of coins, such as privacy tokens, banned in South Korea and Japan.

Tips and Tricks of Crypto Investing

Before you decide on how to invest in cryptocurrency in the UK, you need to understand some key factors that could help to achieve a better results:

Diversify 

Never put all your capital into one cryptocurrency. It is crucial to diversify when investing in the crypto space. As mentioned earlier, you can choose from thousands of tokens, so why not spread your investment? Diversification is the most well-established principle of investment. If one asset class is down, another will typically be up. This is why portfolio diversification is encouraged in traditional and crypto investing.

Diversify of Crypto

As an investor, you can diversify between Layer-1 blockchains, Layer-2 blockchains, and Layer-3 blockchains. You can also diversify across different tokens based on their functions, such as privacy, sustainability, payments, etc.

Never Invest More Than You Can Afford To Lose 

If you are new to cryptocurrency investing, starting with a small investment is best. This allows you to gauge the market without suffering a significant loss. Investors suffer big losses mainly because they put in too much capital. When their investment fails, they blame the market instead of reconsidering their investment strategy.

The chances of major losses in crypto investing are high, so make sure you don’t invest more than you can afford to lose.

Dollar Cost Average 

Having learnt how to invest in cryptocurrency in the UK, many investors are now looking to dollar cost averaging. TheDollar-cost averaging your investments is an excellent way to mitigate exposure to rapid price spikes. Dollar-cost average means investing small sums at regular intervals.

So instead of investing a lump sum of £10,000, you can spread your investments over ten months, investing £1,000 each month. Various studies have supported that dollar-cost averaging is more beneficial than lump sum investing, allowing you to average your investment times.

Key Points 

  • The term “cryptocurrency” refers to virtual money secured by the blockchain. 
  • Cryptocurrencies can be purchased and traded via a crypto exchange or peer-to-peer transactions and broker-dealers. Once you purchase crypto, you can store and manage your assets through a crypto wallet, 
  • Investing in crypto can be done through various methods, such as buying cryptocurrency directly or investing in companies that have exposure to crypto assets. 
  • When purchasing crypto, pay attention to transaction fees. These fees can vary considerably between different cryptocurrencies. 
  • Investing in crypto is risky, so it is important only to invest what you can afford to lose.

Conclusion 

This beginners’s guide on how to invest in cryptocurrency in the UK covered the best crypto exchanged to consider, benefits and risk of crypto investing. In tackling how to invest in cryptocurrency in the UK, our conclusion is that leading platform eToro is the best exchange for beginners and more experienced investors alike.  The platform offers a huge variety of services and is a secure and FCA relegated exchange. 

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eToro Exchange

  • Free Copy Trading of Professional Traders
  • Best Place to Buy Crypto
  • Minimum Deposit only $10
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Don’t invest unless you’re prepared to lose the invested amount. Crypto trading is high-risk investment.

FAQs

What Is The Best Cryptocurrency To Invest in 2024?

The answer to this is subjective and depends on your trading goals. You must research to determine which cryptocurrency is the best for you. This is because there are thousands of cryptocurrencies to choose from, and your investment is not guaranteed to pay off.

Some cryptocurrencies have generated returns of over 1000% in just over a year. On the other hand, some cryptocurrencies have lost over 90% of their value in the same duration. You must be aware of the risks and rewards when investing in crypto.

Yes, as a resident of the UK, you can invest in crypto through any of the crypto trading platforms in the market.

You can start investing in crypto by opening an account with a crypto exchange of trading platform. Once your account is created, deposit funds in the account and search for the asset you wish to purchase. Once you have chosen your asset, place a buy order.