Buying crypto in the UK: what protection you really have, and how to check a platform

Cryptoassets are easier to buy than ever. A few taps in an app, and you can own a slice of bitcoin or ether. That ease hides an important question many UK buyers never ask: if something goes wrong, who, if anyone, has your back?

The honest answer is that the protections around crypto are much thinner than those around a bank account, a pension or a stocks and shares ISA. This article explains what the UK rules do and don't cover, and the checks worth making before you use any crypto platform. It is general information, not advice about whether crypto is right for you.

FCA registration: what it does and doesn't mean

Since January 2020, UK businesses carrying out certain cryptoasset activities, such as running an exchange or providing custodian wallets, have had to register with the Financial Conduct Authority (FCA) under the money laundering regulations.

This registration is often misunderstood. It mainly shows that the FCA has assessed the firm's anti-money laundering and counter-terrorist financing controls. It is not the same as being fully authorised and supervised in the way a bank or investment platform is. In particular, registration does not mean:

• the FCA has judged the firm to be financially sound
• your money or coins are ring-fenced if the firm collapses
• the products sold are suitable for you

That said, registration is still a meaningful minimum. A firm marketing crypto services to UK customers without it, or without some other legal basis to do so, is a serious red flag.

No FSCS safety net, and limited routes to complain

The Financial Services Compensation Scheme (FSCS) protects savers and investors when authorised firms fail. Crypto holdings are generally not covered. If an exchange goes bust, is hacked or simply disappears, there is usually no compensation scheme to fall back on, and you may end up as an unsecured creditor in an insolvency, if anything is recovered at all.

Similarly, the Financial Ombudsman Service can generally only look at complaints about regulated activities. Much crypto activity falls outside that, so your options for an independent complaint may be limited.

A fuller regime is coming in October 2027

The UK is bringing cryptoasset firms under full FCA regulation for the first time. The legislation was made in February 2026, and the new regime is expected to come into force on 25 October 2027. From then, activities such as running a crypto trading platform, safeguarding customers' crypto and arranging staking will generally need FCA authorisation, not just money laundering registration.

Firms had to start applying from 30 September 2026 and must apply by 28 February 2027. Those that do not apply will have to wind down their UK crypto business before the regime starts. If you use a platform, it is reasonable to ask whether it has applied for authorisation.

Until October 2027, the limited protections described above still apply. Check the FCA website for exactly what the new regime will and won't cover, rather than assuming new protections already apply.

The financial promotion rules

Since October 2023, firms marketing cryptoassets to UK consumers have had to follow the FCA's financial promotion rules. In practice, this is why you will now see:

• Prominent risk warnings telling you that you could lose all the money you invest and should not expect to be protected if something goes wrong
• A cooling-off period when you first invest with a firm, giving you time to reconsider before your first purchase goes through
• Appropriateness checks, often a short quiz, to test whether you understand the risks
• A ban on incentives such as refer-a-friend bonuses or free coins for signing up

These measures are designed to slow you down, not to guarantee anything. If a platform offers you sign-up bonuses or skips risk warnings entirely, ask why.

Regulated crypto exposure: exchange-traded notes

From October 2025, the FCA allowed retail investors to buy crypto exchange-traded notes (cETNs) listed on recognised UK investment exchanges, through ordinary investment platforms. These track the price of a cryptoasset without you holding the coins directly.

This route can mean dealing with a familiar, authorised platform. It does not remove the risk of the underlying asset: if the crypto price falls, so does the note. A note is also a promise by its issuer to pay, so there is a risk the issuer fails to pay.

The tax wrappers have changed too. When cETNs first became available they could be held in a stocks and shares ISA, but since 6 April 2026 they can only go into an Innovative Finance ISA, which relatively few platforms offer. They can also be held in registered pension schemes, such as a SIPP. The government has said it will keep this under review. Our complete guide to the different types of ISA explains how Innovative Finance ISAs work.

Practical checks before you use a platform

Before sending money anywhere, it is worth working through a short checklist.

1. Search the FCA Register. Look up the firm's exact name and check its status. Be wary of "clone firms" that copy the name, address or registration number of a genuine business. Contact the firm only using details from the Register, not from an advert or message.

2. Check the FCA Warning List. The FCA publishes a list of firms it believes are operating without permission or running scams. A quick search can save a lot of grief.

3. Read how your assets are held. Does the platform hold your coins separately from its own? Does it lend them out or use them for staking? Terms such as "earn", "yield" or "lending" usually mean extra risk to your holdings.

4. Understand the costs. Spreads, trading fees, deposit and withdrawal charges and network fees can add up. Some platforms advertise low commission but quote wide buy and sell prices. Our guide to the true cost of investing explains how spreads and charges work.

5. Test withdrawals. Before committing a larger sum, consider making a small deposit and withdrawing it, so you know the process works.

6. Check your bank's stance. Some UK banks block or limit payments to crypto platforms, partly because of fraud concerns. Knowing this in advance avoids surprises.

Exchange or self-custody?

Leaving coins on an exchange is convenient, but you rely on that firm staying solvent and secure. Moving them to a wallet you control, often called self-custody, removes that particular risk but adds others. If you lose your recovery phrase or private keys, there is usually no way to get your coins back, and no helpline to call.

If you do self-custody, think about how your family would access your holdings if you died or lost capacity. Crypto that nobody can access is effectively lost, yet may still form part of your estate.

Spotting crypto scams

Scammers favour crypto because payments are fast and hard to reverse. Common patterns include:

• Fake celebrity endorsements in social media adverts or bogus news articles
• Romance or friendship scams, where a new online contact gradually steers you towards a "trading platform"
• Impersonation, where someone pretends to be from your bank, the police or an exchange and urges you to move funds to a "safe" wallet
• Recovery scams, which target people who have already lost money, promising to get it back for an upfront fee
• Guaranteed or unusually high returns, often shown on a convincing-looking dashboard that you cannot actually withdraw from

Be especially cautious if you are asked to move money from your bank to a crypto account and then on to somewhere else. Bank fraud reimbursement rules may not cover losses once money has left your own account at a legitimate exchange, so getting it back can be very difficult.

If something goes wrong

Act quickly. Contact your bank straight away if you have paid a scammer, as there may be a small window to stop or trace the payment. Report the firm or individual to the FCA, and report fraud to the police through the national fraud reporting service, or to Police Scotland if you live in Scotland. MoneyHelper, the government-backed guidance service, also has information on scams and where to get help.

Keep good records

Whatever you do, keep records of every purchase, sale, swap and transfer, including dates, amounts in pounds and fees. Exchanges can close or lose data, and HMRC expects you to be able to back up any figures you report.

HMRC is also getting more data of its own. Since 1 January 2026, UK crypto platforms have had to collect details from their users, including National Insurance numbers, and report users' transactions to HMRC each year. The first reports, covering 2026, are due by 31 May 2027. If you don't give a platform the information it asks for, you could face a penalty of up to £300. HMRC can compare what platforms report with what you put on your tax return, so make sure the two match.

Our guide to crypto and UK Capital Gains Tax explains how tax applies to crypto.

The bottom line

The UK has made crypto marketing safer and more transparent, and fuller regulation is due in October 2027. But buying crypto today still means accepting far fewer protections than most mainstream investments offer. Checking the FCA Register, understanding how your assets are held and staying alert to scams won't remove the risk, but they can help you avoid the most avoidable losses. Only use money you could afford to lose entirely.

This article reflects the rules as at 17 October 2026. It is general information only and is not personal financial advice. Cryptoassets are high-risk and largely unregulated, and you could lose all the money you invest.