Thinking about putting money into crypto? Here’s a balanced look at the opportunities, the risks, and the tax implications you need to consider.

What exactly is cryptocurrency?

In its original form (Bitcoin), cryptocurrency was a decentralised digital currency. A way to send money directly to anyone, anywhere, without a bank. It runs on an encrypted blockchain network between anonymous digital wallets. It’s entirely digital, and you have full ownership outside the banking system.

Today there are over ten thousand cryptocurrencies beyond Bitcoin. Their uses range from smart contracts and Web3 applications to trading platforms, tokenised gaming, and meme coins.

Should you invest?

There’s no simple answer. Here’s an honest look at both sides:

If you do invest: some ground rules

• Never invest money you can’t afford to lose.
• Research the projects you invest in. Look at the team, the technology, and the community.
• Have a strategy and set realistic price targets before you invest.
• Avoid leverage trading, it can amplify losses just as fast as gains.
• When experienced traders start showing off, the market is probably overheated.

Don’t forget about tax

Whatever you decide, remember that UK crypto profits are taxable. Capital Gains Tax applies when you sell, swap, or spend crypto. From 2026, CARF means HMRC automatically receives your transaction data from UK exchanges 

If you do invest, set up Recap from day one. It’s much easier to track as you go than to try to reconstruct years of trading history later.

Tax compliance matters

HM Treasury estimates 55–95% of crypto holders are non-compliant. With CARF reporting now live, getting your records in order from the start will save you significant hassle down the line. Use Recap and speak to a Crunch accountant.

FAQs

Is crypto a good investment?

That depends entirely on your risk tolerance, financial situation, and investment knowledge. Crypto remains highly volatile and speculative. And remember, this article is not financial advice, it’s purely for informational purposes.

Is crypto legal in the UK?

Yes. Buying, selling, trading, spending, and gifting crypto is legal. The FCA’s ban on crypto derivatives for retail consumers was lifted in October 2025. However, crypto isn’t regulated as a currency.

Do I need to pay tax on crypto I haven’t sold?

No. Simply holding crypto isn’t a taxable event. Tax only applies when you dispose of it or earn it as income.

Updated February 2026. This article is for informational purposes only and is not financial advice. Crypto trading is extremely risky.

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