Best Place to Buy Bitcoin in the UK

With its inception in 2009, Bitcoin ushered in the start of a new financial era. While tax authorities, governments, and regulators around the world debate on how best to handle cryptocurrencies, many people are simply wondering where is the best place to buy bitcoin in the UK. Or simply, if they’re legal. The short answer depends on where you are and what you intend to use Bitcoin.

The opaqueness with which many governments view cryptocurrencies stems from the fact that there is no single party in charge. Since central banks have no power to issue cryptocurrencies like Bitcoin, it offers a convenient way to transfer money across borders with a much higher degree of privacy. This has led to many central banks and regulatory authorities casting a wary eye and raises a whole new set of problems. Unfortunately, some countries have opted to outlaw them altogether.

Is Bitcoin legal in the UK?

With the ever-increasing popularity of cryptocurrencies like Bitcoin, more and more people are beginning to wonder about the legal status of cryptocurrencies and whether they’re allowed to buy Bitcoin and own them. Unfortunately, governments tend to have an understandable amount of lag in situations like this. And the best place to buy Bitcoin in the UK  – the safest, to be sure – would be licensed bitcoin exchanges,

As such, in some countries like South Africa, Australia, the US, Mexico, it’s perfectly legal to buy and own Bitcoin. But in others, like Egypt or Bolivia, it’s completely illegal. And there are those countries still sitting on the fence, like Taiwan for example, where you are allowed to own digital currency, but financial services aren’t allowed to facilitate transactions with Bitcoin.

While the UK has no official laws on cryptocurrencies and Bitcoin, regulation has been quite generous towards consumers, allowing users to buy digital currency relatively easily. Despite the fact that the UK doesn’t consider digital currencies as legal tender, many exchanges have their own operations within the United Kingdom.

While users may face some restrictions on how much Bitcoin they’re allowed to buy, the Financial Conduct Authority (FCA) has made its main priority the prevention of money laundering and terrorist financing. As such, depending on how many Know Your Customer checks the exchange has completed will determine how much Bitcoin users can buy.

Financial Conduct Authority to the rescue

In order for exchanges to begin operating, they first have to register with the FCA. The FCA is now the only Anti-Money laundering authority for crypto-related businesses in the UK. After a decade of laissez-faire oversight, the FCA is now clamping down on crypto exchanges Fortunately, the FCA has taken a pro-Bitcoin stance and is looking to regulate the cryptocurrency environment to be more supportive of the industry.

While the FCA doesn’t have specific guidelines for exchanges just yet, it does require authorization from crypto-related businesses to be included in the existing financial regulations for derivatives and monitors crypto-businesses to ensure they’re complying with anti-money laundering laws and anti-terrorist financing. The FCA has also stated that it can’t help if you have your Bitcoin lost or stolen.

In 2017, the government of the United Kingdom stated that, because Bitcoin was unregulated, it was going to be treated as a “foreign currency” for most purposes, including VAT. As such, Bitcoin is treated as “private money” in the United Kingdom. This means that when you exchange Bitcoin for fiat currency such as sterling or the euro, no VAT will be added to the value of the Bitcoin.

However, VAT will be added as normal on goods or services sold in exchange for Bitcoin. Capital gains tax is also applicable to any profits or losses realized from Bitcoin.

As for how they’re taxed in the UK, Her Majesty’s Revenue and Customs (HMRC) issued a brief, stating that their “unique identity” means they can’t be treated in the same way as traditional currencies or investments, and how they’re taxed is dependent on the activities and parties involved.

Future regulation

Mark Carney, who served as the head of Bank of England (the UK’s central bank) for seven years ending on March 15, had a tendency to be wary of cryptocurrencies. He warned in 2018 that Bitcoin and cryptocurrencies could pose a serious threat to financial stability and called for digital currencies to be held “to the same standards as the rest of the financial system.” Other times Carney has highlighted the potential cryptocurrencies have, being surprisingly supportive of Facebook’s controversial cryptocurrency, Libra. He criticized how expensive and time consuming it was for businesses and consumers to make transactions with Bitcoin, but stressed the need for regulation. Speaking about Libra, Carney stated, “it’s either going to be regulated properly, overseen properly, or it’s not going to happen.”

However, with Carney’s successor, Andrew Bailey having taken up the mantle as of 16 March, it remains unclear how cryptocurrency regulation will be treated in the UK. On March 4, Bailey spoke to members of the UK parliament at a Treasury Select Committee, stating “if you want to buy Bitcoin, be prepared to lose all your money” before saying that Bitcoin “has no intrinsic value.” However, he did state that it has “extrinsic value” and expressed surprise that it hasn’t caught on as much as people thought it would. This probably wasn’t what Bitcoin advocates wanted to hear.

Chainalysis Report

Then, last year, the danger of cryptocurrencies being involved in money laundering was at the center of everyone’s mind. Chainalysis, a crypto analytics firm, released a report that stated as much as $2.8 billion worth of illicit Bitcoin had been laundered through exchanges in 2019. The report drew attention to the underregulated over-the-counter exchanges that these criminals tend to favor. The Financial Action Task Force (FATF) has since introduced the Travel Rule which requires member nation crypto firms to disclose customer information on transactions exceeding $1,000.

In Europe, the Eu released the 5th Anti-Money Laundering Directive which included a hard clampdown on terrorism financing and money laundering. Additionally, the already strict Know Your Customer and AML compliance were ramped up even more, which saw several crypto-related businesses shut their doors. Now, crypto companies based in the UK look like they’re set for some more shakeup. In October last year, the FCA announced it was taking sole responsibility of AML and Counter-Terrorist Funding (CTF) efforts. As the FCA’s officially came into effect on 10 January 2020, all UK crypto companies have to register or cease all operations.

The FCA will continue shaping crypto regulations in the UK which may continue to affect the ease of use with which some exchanges have come to be known by. the regulations could also carry over to the various forms of payment, like credit card deposits and the risks associated with those. But time will tell how the FCA rolls out its regulations and how this will impact digital currency in the United Kingdom.

Where can I buy Bitcoin in the UK?

Although the United Kingdom doesn’t cater to crypto businesses in the same way as Malta, for example, the country still has are relatively relaxed stance on Bitcoin. As such, there are lots of crypto businesses based in the UK, providing its residents with you have several options from where you can buy Bitcoin. You can also select a platform based on your preferred payment method or on the number of fees they charge.

An exchange

If you’re looking for a good Bitcoin exchange, there is a ton available to users in the United Kingdom. For beginners, Coinbase often comes highly recommended thanks to its ease of use. They provide greater ease of use newcomers to buy Bitcoin with a credit card or debit cards and bank account is one of the world’s largest Bitcoin brokers.

Coinbase also provides its UK customers with two payment methods: debit cards and credit cards, or fiat deposits. If opting for a deposit, you’ll need to complete the KYC requirements and deposit the money. If you use a credit card or a debit card you’ll have to register with Coinbase and provide the required KYC documentation. Note that the crypto exchange charges a standard fee of 3.99% on all credit card and debit card purchases. More info on their fee structure can be found here.

CEX is another popular Bitcoin exchange and offers several payment methods. Established in London in 2013, CEX has grown into a leading crypto exchange and offers its users five other cryptocurrencies allowing users to buy Bitcoin and several other cryptocurrencies that can be bought through various payment methods through your bank account via debit cards, credit cards or a bank transfer.

You can also withdraw and deposit funds directly from the exchange’s mobile app. CEX tends to slap on higher fees. For depositing, there is no fee on bank transfers but a 2.99% fee for Visa and Mastercard. When withdrawing, if using a debit card or credit card, the fees vary with bank transfers costing 0.3% + £25.

Another crypto exchange that has earned a solid reputation among the Bitcoin community is Coinmama. It provides several payment methods, including a credit card and bank transfer to buy Bitcoin in the UK quickly and securely. Though it’s important to point out that Coinmama only allows you to make purchases. Additionally, they don’t provide their own inbuilt Bitcoin wallet.

Therefore, you’re going to need to set up your own Bitcoin wallet before transacting with the crypto exchange. There is also a 5% fee charged on each transaction if using a debit card or credit card. There are also several KYC checks you need to do which can take several days to be approved.

Binance Jersey, an extension of Binance, one of the largest exchanges in the world, is one of there most trusted names in the cryptocurrency sector and is one of the best ways of buying Bitcoin in the UK thanks to its ease of use. Early last year, Binance announced it would support purchases made via a debit card or a credit card and even offers free deposits and withdrawals until June 30, 2020. It’s very simple to start buying Bitcoin with Binance: just open an account and go through the KYC procedures. Everything should be completed and verified within an hour.

Launched in 2015, Changelly is an “instant” crypto exchange based in Hong Kong with offices around the world. Changelly operates a little differently to the other exchanges on this list. transacting with Changelly begins with a cryptocurrency wallet and your cryptocurrency of choice.

Then, based on the crypto and amount, the platform will choose the best trade and finds the best rate among various other crypto exchanges. It will then convert your money into the chosen cryptocurrency for a fee of 0.5%. Lastly, Changelly then delivers the freshly converted crypto into your second wallet. The service provides solid ease of use and users can choose between payment methods like a credit card or a bank transfer.

Peer-to-peer

Peer-to-peer services offer some of the easiest and most convenient methods for buying Bitcoin in the UK. They work very much like traditional exchanges, but give you the option of trading directly with another person. This method is often advised to newcomers as you don’t have to deal with the hassle and learning curve some exchanges have. This also allows for fewer restrictions and requirements creating much more ease of use, meaning you can buy Bitcoins faster.

Buying Bitcoin through a peer-to-peer service might be the easiest way for newcomers, and LocalBitcoins is one of the most popular platforms out there thanks to its ease of use. It puts you in contact with people looking to buy and sell Bitcoin in your area. You have the option to buy or selling Bitcoin with cash, in which case you’ll need to meet up with the person.

 

Alternatively, you can use the platform to initiate a buy or sale with a bank transfer and your credit card. All the funds are securely held in escrow until the buyer has gone through with the trade. Upon receiving notification of payment, the seller will then initiate the exchange.

Bisq is another popular peer-to-peer service available to residents of the UK to buy Bitcoins. What’s more is that Bisq brands itself as a “decentralized exchange,” meaning that the exchange doesn’t require the help of a third party to safely secure your funds. Decentralized exchanges usually don’t require you to hand out your personal information either, making it possible to begin buying much quicker. Being a decentralized exchange, rather than a centralized exchange, Bisq may have lower liquidity.

The exchange will also let you buy with your preferred payment method as they support more than 20 including Faster Payments, Face-to-Face, Advanced Cash, Revolut, SEPA, and many others. However, the platform won’t accept credit cards or PayPal

Bitcoin ATMs

Bitcoin ATMs are more suited for transferring smaller sums of money for Bitcoin, provided you can find a Bitcoin ATM. Coin ATM Radar states there are currently 256 Bitcoin ATM machines across the UK. Exchanging your Bitcoin this way can be quite convenient if looking to make deposits more anonymously.

Once you’ve found a Bitcoin ATM, you can deposit Bitcoin into an address of your choosing. Note that Bitcoin ATMs only accept cash as payment for Bitcoin. As such, you won’t be able to use credit cards. However, ATMs provide great ease of use

What’s the cheapest way to buy Bitcoin?

While buying Bitcoins through a Bitcoin exchange is typically the most convenient method, it tends not to be the cheapest. Almost all exchanges will charge you a fee when buying Bitcoin; it’s how they make their money. As such, if you’re willing to forego the convenience, there are several options for you to use to buy Bitcoins for a little cheaper.

Possibly the cheapest way of buying Bitcoin in the UK is to deposit GBP into Coinbase, and then transfer the funds over to Coinbase Pro – this will let you buy at the real exchange rate with low fees. The only downside with this method is the time it takes. Coinbase has begun holding GBP funds deposited through a UK bank transfer for five days. This means that until your funds clear completely, you won’t be able to use the money you deposited to buy Bitcoin.

A more convenient, albeit a slightly more expensive, method to buy Bitcoin in the UK would be through Wirex. There will be a few more fees involved, but you’ll be able to buy Bitcoin in the UK at the real exchange rate with very low trading fees.

Verified with Wirex

Once you have registered and been verified with Wirex, you can complete the buying process within a few hours, rather than days. It’s important to note here that if using Wirex, it’s better to use a debit card rather than a credit card, as it’s often considered a cash advance. Instead, its faster and cheaper to use a debit card.

Another option that people have been using to buy Bitcoin in the UK is Revolut. This method can be quite convoluted but it’s also very cheap. You’ll need to download the Revolut app and create an account. You’ll also need a Bitstamp account. Then, activate your EUR account in Revolut, deposit some GBP to your GBP Revolut account, and exchange the GBP for EUR in Revolut.

That will complete instantly, then transfer your EUR from Revolut into Bitstamp. You can now buy Bitcoin on the BTC/EUR market and a very good rate.

OTC Service

Another option would be to make use of an OTC Service. An over-the-counter service will allow you to buy Bitcoin with a bank account and a bank transfer. There are several popular options like Paxful, Bittylicious, and Solidi. An OTC Service won’t give you the best possible rates, but they will be competitive. They also generally provide good ease of use, helping you to buy Bitcoin quicker. Most will add a 2% fee on top of the BTC to GBP exchange rate.

While there is already a lot of choice for residents of the UK looking to buy Bitcoins, these choices are likely to expand as cryptocurrencies continue to grow in popularity and importance. If you’re looking for how to buy a Bitcoin, hopefully, this guide will provide you with all the info you need on buying a Bitcoin.

A word to the wise

Whether you’re looking for a new Bitcoin exchange or simply looking for one that accepts your preferred payment method like a bank transfer you’ll find it here. If exchanges aren’t your thing, using an OTC Service with a bank transfer to buy Bitcoin might be a better option. Finally, you can always try a peer-to-peer service or make use of a Bitcoin ATM.

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