Crypto is awkward in a UK portfolio. Not because of the underlying volatility — investors choose that consciously — but because the regulatory and tax structure around it is genuinely different from equity investing in ways that affect how it fits into a wider portfolio. It cannot live in an ISA or SIPP. It is a CGT asset, not a foreign currency. The FSCS does not cover it. The FCA-authorised exchange list is short. And the promotion rules that came in during October 2023 reshaped what UK retail investors can be marketed.
This article is about the structure, not the trade. Whether to hold crypto, how much, and which assets are personal questions investors take to advisers. The questions this article tries to answer are: where does crypto fit structurally in a UK portfolio, what regulatory and tax frame governs it, and how do you track it alongside equities in a meaningful way.
This is not financial advice. Past performance does not guarantee future returns. Consider speaking to an FCA-authorised financial adviser for personalised guidance.
The FCA cryptoasset promotion regime
October 2023 was the inflection point for UK crypto regulation. The FCA's cryptoasset promotion rules came into force on 8 October 2023, bringing crypto promotions under the FCA's financial-promotion regime for the first time.
Headline mechanics:
- Crypto firms cannot promote to UK retail unless one of four exemption conditions is met. The cleanest exemption: the firm is FCA-registered under the money-laundering regime and approved to make its own financial promotions.
- Mandatory risk warnings. Promotions must include the prominent: "Don't invest unless you're prepared to lose all the money you invest."
- Cooling-off periods. New retail customers must wait 24 hours after their first crypto purchase before completing it.
- Suitability assessments. Customers must complete a knowledge assessment before being permitted to invest.
- Bans on incentives. "Refer-a-friend" bonuses and similar inducements were banned.
The regime applies to qualifying cryptoassets — Bitcoin, Ethereum and similar unbacked crypto, plus stablecoins. NFTs and security tokens fall under different regimes. The practical effect for investors: sign-up flows now include risk warnings, knowledge assessments and cooling-off windows. Foreign exchanges marketing to UK customers without registration disappeared from app stores or restricted access. The list of UK-accessible crypto venues narrowed materially through late 2023 and 2024.
FCA-authorised crypto firms
The FCA maintains a register of cryptoasset firms approved under the Money Laundering Regulations — around 50 firms, far smaller than the global crypto venue universe. Notable UK-registered firms include Coinbase, Kraken, Bitstamp, Gemini, Crypto.com, Revolut (for crypto features), eToro UK and PayPal UK. Firms not on the list cannot legally promote to UK retail under the cryptoasset regime.
Two distinctions worth noting:
- FCA registration under MLR is not the same as FCA authorisation as a regulated firm. A crypto firm registered for anti-money-laundering purposes is not automatically a regulated investment firm, not FSCS-covered, and not subject to the broader investor protection rules. The MLR registration is a money-laundering compliance check, not a stamp of investor protection.
- Promotion approval is separate from registration. A firm also needs approval to make its own financial promotions to retail under the cryptoasset rules. Some MLR-registered firms use a separate FCA-authorised firm for promotion approval.
The FCA register is authoritative for both. Worth checking before depositing meaningful funds with any crypto venue.
Why crypto can't be in a SIPP or ISA
A common question: can I hold Bitcoin in my ISA or SIPP for tax efficiency? The answer is no — neither wrapper currently accepts crypto holdings.
ISA regulations specify eligible asset types — shares on a recognised stock exchange, units in collective investment schemes, qualifying corporate bonds, gilts. Crypto does not fall into any eligible category. SIPP rules are slightly more flexible, allowing commercial property and unlisted shares, but HMRC guidance excludes crypto.
What is possible: holding the equity of crypto-adjacent businesses inside an ISA or SIPP — Coinbase, Strategy Inc. (formerly MicroStrategy), Marathon Digital, Riot Blockchain. UCITS-eligible exchange-traded products tracking Bitcoin or Ethereum are not generally ISA-eligible for UK retail because of FCA rules restricting retail access to crypto ETPs. The US-approved spot Bitcoin ETFs (2024) are not UCITS-compliant and not ISA-eligible. Professional investors have access to European crypto ETPs; retail investors do not, as of early 2026.
The practical consequence: any meaningful crypto holding sits outside the UK tax wrapper system, GIA-equivalent for tax purposes.
HMRC view: crypto = asset for CGT
HMRC's published guidance (the Cryptoassets Manual) treats crypto as an asset for capital gains tax purposes — not as currency.
Practical implications:
- Disposal events trigger CGT. Selling crypto for fiat is a disposal. Trading one crypto for another is a disposal of the first crypto and acquisition of the second. Spending crypto on goods or services is a disposal at the GBP-equivalent value at the time.
- CGT annual exempt amount applies. The £3,000 annual allowance for 2026/27 applies to crypto disposals as it does to equity disposals.
- CGT rates. Basic-rate taxpayers pay 18% on gains above the allowance; higher-/additional-rate pay 24% (rates effective from 30 October 2024).
- Section 104 pooling rules apply. Crypto holdings of the same type are pooled into a single asset with an average cost basis (the "Section 104 pool"), much like equity holdings.
- Bed-and-breakfast 30-day rule applies. Buying back the same crypto within 30 days of selling does not reset cost basis.
- Reporting threshold. Gains above £3,000 (or proceeds above £50,000 even if gains are below threshold, for 2025/26+ — check current threshold each year) are reportable on self-assessment.
- Income vs CGT. Some crypto activities (mining at scale, staking with characteristics of trading, airdrops with active acceptance) may be treated as income rather than capital. The line is fact-specific and worth getting professional advice on if you do anything beyond simple buy/hold/sell.
For a UK investor with material crypto activity, the practical implication is that every transaction matters for CGT recordkeeping. A small amount of trading produces a complex tax position quickly. Tools like Recap and Koinly are crypto-specific tax-calculation tools that import wallet and exchange transactions and produce HMRC-format CGT reports — usually preferable to manual spreadsheet tracking for anyone with more than a handful of disposals.
FSCS gap and consumer protection
The Financial Services Compensation Scheme covers eligible deposits at FCA-authorised banks (£85k limit), eligible investments at FCA-authorised investment firms (£85k limit per firm), and a few other categories. Crypto is conspicuously not on the list.
What this means:
- Crypto held at an MLR-registered firm is not FSCS-protected. If the exchange goes insolvent, the FSCS will not compensate retail customers for lost crypto.
- Stablecoin balances on an exchange may not be deposit-protected either. A USDC balance on a UK exchange is a claim on the exchange, not a deposit at a bank. FSCS deposit protection covers GBP balances at an FCA-authorised bank — not crypto-denominated balances at an exchange.
- Self-custody mitigates exchange counterparty risk but introduces operational risk. A lost private key is permanently lost crypto.
- Insurance is sometimes provided by exchanges on a voluntary basis (e.g., Coinbase has limited cold-storage insurance), but coverage is partial and not regulator-mandated.
The FTX collapse in November 2022 was the clearest recent case of customer assets being unrecoverable for years. UK customers of FTX were caught up in the same insolvency process as US and global customers, with no UK-specific protection. The FCA had warned about FTX's lack of authorisation; the cryptoasset promotion regime introduced in 2023 was partly a response to that pattern.
The practical implication for portfolio structure: crypto sits in a category somewhere between "speculative asset" and "high-risk investment without consumer-protection backstops". Position sizing usually reflects this — many UK investors who hold crypto cap exposure at a single-digit percentage of total portfolio.
Stablecoin regulation status
Stablecoins are in active regulatory motion. The position as of early 2026:
- HM Treasury and FCA are progressing stablecoin regulation. The legislative path was set out in 2023–2024 to bring "fiat-referenced stablecoins" used in payments under FCA authorisation. Implementation is in stages.
- Issuer authorisation rules would require firms issuing GBP-pegged or other-fiat-pegged stablecoins for payment use to be FCA-authorised, with backing-asset segregation and reserve requirements.
- Custody rules for firms holding stablecoins on customers' behalf are being finalised. Existing crypto custody under MLR is the interim baseline.
- Algorithmic stablecoins are excluded from the proposed regime — the FCA has indicated they would not be authorised for retail payment use given the structural fragility seen in cases like Terra/Luna.
The practical state is that USDC, USDT and similar stablecoins are usable on UK-registered exchanges but are not yet covered by the new dedicated stablecoin authorisation. That is expected to phase in through 2026–2027. UK investors holding stablecoins as a near-cash position should be aware that the issuer (Circle, Tether) is not FCA-authorised for stablecoin payment activity yet, and the assets backing the stablecoin sit in custodial structures outside UK regulatory reach.
For portfolio tracking purposes, stablecoins are usually treated as cash-equivalent at GBP value, with the understanding that the credit profile of the issuer is not the same as a UK FCA-authorised bank.
Tracking crypto alongside equities
Crypto creates several asset-class-specific tracking challenges:
- Wallets vs exchanges. Many crypto holders have positions across both a centralised exchange (where buying happens) and a self-custody wallet (where long-term holdings sit). A complete portfolio view needs both — wallet balances are pulled by public address.
- Transaction history matters more. For equity, buy-and-hold investors need only current units and average cost. For crypto, every transaction (transfer between wallets, swap, staking reward, gas fee) potentially has tax implications.
- 24/7 markets and many decimal places. Crypto trades continuously. Bitcoin is measured to 8 decimal places, Ethereum to 18 — trackers that round at 2 or 4 places introduce material error.
- Multiple denomination conventions. A position can be valued in GBP, USD, BTC, ETH. The portfolio-level view needs everything in GBP.
Crypto-specific trackers (Koinly, Recap, Delta) handle these well but are weaker on equity integration. Equity-first trackers (Sharesight) handle equities well but require manual crypto entry. The intersection — a tracker that handles both well — is sparsely populated. Kubera does it as a net-worth aggregator. Invormed is being built around the case of a UK investor with both equity holdings (across ISA/SIPP/GIA) and crypto, with a unified view that respects each asset class's mechanics.
Tools handling crypto + equity unified view
State of the market:
- Kubera — Net-worth aggregator. Connects to crypto wallets via address and brokers via API. Strong on consolidated balance-sheet view; lighter on position-level analysis.
- Delta (eToro-owned) — Originally crypto-first, now supports equities. UK tax features absent.
- Sharesight — Equity-first. Crypto support is manual and limited.
- Koinly / Recap — Best-in-class crypto CGT calculation. Light on equity.
- Custom spreadsheet — Maintainable but high time cost.
- Invormed — Building toward unified UK-wrapper-aware tracking covering both equity (ISA/SIPP/GIA) and crypto, with one portfolio view that respects each asset class's mechanics.
The honest picture in 2026: a UK investor who wants one tool for both equities and crypto with deep UK tax handling on each side does not yet have a great option. The pragmatic workflow tends to be a crypto-specific tax tool (Koinly/Recap), an equity tracker (Sharesight or similar), and a higher-level aggregator for the unified balance-sheet view.
A note on position sizing
Without straying into advice — the structural points above tend to push UK investors toward modest crypto allocations. No tax wrapper, no FSCS protection, high volatility (cyclical 70–80% drawdowns), and operational risk (lost keys, exchange insolvency, smart-contract risk) combine such that even investors bullish on the asset class structurally cap exposure at single-digit percentages of total portfolio. The carved-out portion is often treated explicitly as "risk capital" that could go to zero without impairing financial plans. Actual position sizing is exactly the kind of question worth discussing with an FCA-authorised adviser.
FAQ
Is Coinbase UK FCA-authorised?
Coinbase Payments Limited and CB Payments Limited are registered with the FCA under the Money Laundering Regulations and approved to make their own financial promotions to UK retail under the cryptoasset promotion regime. This is not the same as being a fully FCA-authorised regulated investment firm — Coinbase customers are not FSCS-protected for their crypto holdings. The FCA's cryptoasset register is the authoritative source for current status.
Can I hold Bitcoin in my ISA?
No. ISA regulations specify eligible asset types and crypto is not among them. UCITS-eligible Bitcoin ETPs that exist in Europe are not ISA-eligible for UK retail because of FCA rules restricting retail access to crypto ETPs. Indirect exposure via the equity of crypto-related listed companies (Coinbase, Strategy Inc., Marathon Digital) is possible inside an ISA, but direct crypto holding is not.
How does HMRC tax crypto?
As an asset for capital gains tax purposes. Disposals — selling for fiat, swapping crypto for crypto, spending crypto — trigger CGT events. The £3,000 CGT annual exempt amount applies. Section 104 pooling and bed-and-breakfast 30-day rules apply. CGT rates from 30 October 2024 are 18% basic-rate / 24% higher-rate. Some crypto activities (mining, staking with trading characteristics, certain airdrops) can be treated as income rather than capital — the line is fact-specific.
Is my crypto FSCS-protected?
No. The FSCS covers eligible deposits at FCA-authorised banks and eligible investments at FCA-authorised investment firms. Crypto held at an MLR-registered cryptoasset firm is not FSCS-protected. If the exchange becomes insolvent, customers rank as unsecured creditors. This is a structural feature of the UK crypto regime, not a gap that has been closed.
How do I track crypto + ETFs in one place?
Currently no consumer tool offers deep handling of both with full UK tax integration. The pragmatic workflow is a crypto-specific tax tool (Koinly or Recap) for crypto CGT, an equity tracker (Sharesight or similar) for equity CGT, and a balance-sheet aggregator (Kubera or similar) for the unified view. Building one tool that covers both well — with UK wrapper logic on the equity side — is genuinely an open product opportunity that newer tools (Invormed) are working toward.
Are stablecoins regulated yet?
Partly. The legislative framework for fiat-referenced stablecoins used in payments is being phased in by HM Treasury and the FCA, with issuer-authorisation and custody rules expected through 2026–2027. As of early 2026, stablecoins like USDC and USDT are usable on UK-registered exchanges but the issuers themselves are not yet FCA-authorised for stablecoin payment activity. Algorithmic stablecoins are excluded from the proposed regime entirely.
Invormed is in early access — join the early-access waitlist.