The UK has positioned itself as an attractive platform for cryptocurrency business development. There is no official licensing of crypto activity in the country, but a few years ago the Financial Conduct Authority (FCA) launched the Innovation Hub. This platform offers advisory legal support to cryptocurrency companies and stakeholders. Registration on Innovation Hub s not mandatory, which creates some uncertainty regarding the regulation of crypto-business in the UK.

In the UK today, the term “cryptocurrency” in legislation does not refer to virtual currencies, but to crypto assets. The UK Crypto Asset Taskforce, which includes the FCA, HM Treasury (HMT) and the Bank of England (BoE), defines crypto assets as “digital representations of value or contractual rights” that are cryptographically protected, use distributed ledger technology and can be transferred, stored or traded electronically. These include:

  • exchange tokens, such as bitcoin and ether, based on distributed ledger technology (DLT) – these are not issued or backed by a central bank or other government agency, do not provide the typical rights or access typical of securities or service tokens, but can be used as a medium of exchange or for investment;
  • utility tokens, which are also used as a medium of exchange or investment;
  • security tokens that grant rights to company assets, the right to redeem cash or a share of future earnings;
  • electronic money (e-money) tokens, which provide access to certain products or services through blockchain-based platforms.

In 2021, the government commissioned the Bank of England to investigate possibly creating a central bank digital currency (CBDC). It was proposed that “bitcoin” (a digital version of the pound sterling), would allow companies and individuals to open direct accounts with the Bank of England, increase access to central bank funds, speed up domestic and international transfers, and increase the transparency and efficiency of the financial system. At the same time, it was not CBDC’s mission to replace cash. However, at the moment, a decision on the implementation of Bitcoin in the UK is still pending.

In April 2022, the government pledged to introduce a new system of regulation of crypto-assets, taking into account the associated risks and opportunities. This work resulted in a consultation paper with proposals for a future regulatory system, published on February 1, 2023. These proposals build on previous initiatives by Her Majesty’s Treasury focusing on stablecoins and the development of crypto asset financial technology. The proposals aim to reaffirm the UK’s ambitions to be a leader in crypto asset technology and innovation in the financial sector, and to create an enabling environment for crypto asset service providers to operate and grow in the country while managing potential risks to consumers and financial stability.

In April 2022, the UK government announced plans to introduce a new system of regulation for crypto assets that takes into account both the risks and opportunities of this area. As a result of this work, a consultation paper with proposals for the future regulatory system was published on February 1, 2023. These proposals build on previous initiatives by Her Majesty’s Treasury, including stablecoins and the development of crypto asset financial technology. The new rules aim to protect consumers from fraud and other financial crimes, ensure transparency in the crypto asset market, promote innovation in the field, and reduce risks to financial stability.

The consultation paper proposes several measures, including registration and licensing requirements for crypto asset service providers, anti-money laundering (AML) and counter-terrorist financing (CFT) rules for crypto asset transactions, data protection requirements for crypto asset service providers, and regulation of crypto asset advertising. The publication of the consultation document is a significant step towards a comprehensive system of crypto asset regulation in the UK. The final system will be developed taking into account the feedback received during the consultation.

Advantages of obtaining the Crypto license in the UK

The benefits of obtaining a cryptocurrency license in the UK:

Competitive taxation system
Currently, corporate tax rates in this jurisdiction are as low as 19%. In addition, cryptocurrencies are treated as assets rather than currency, and capital gains tax applies to gains from cryptocurrency assets when realized, rather than being taxed as income from currency. Also, no VAT is levied on cryptocurrency transactions.

Simple and transparent registration process
Registering a cryptocurrency company in the UK is relatively simple and transparent. You can choose from various forms of organization to the structure that best suits the needs of your business.

Access to the European market
Despite leaving the European Union, the UK maintains close ties with the EU. Obtaining a cryptocurrency license in the UK can give you the benefit of passporting treatment, allowing you to operate in the European Economic Area without the need for additional licenses in each EU member state.

Thriving ecosystem of fintech and blockchain startups
The UK has a thriving ecosystem for fintech and blockchain startups, including many incubators, gas pedals, and venture capital funds that aim to support innovative cryptocurrency companies. This environment provides opportunities for social and business networking, learning, and potential partnerships.

The advantage of using the English language
Doing business in the UK allows you to use English as your primary language of communication, making it easier to interact with international partners and customers.

Legal stability
The UK has a common law system that is characterized by its stability and reliability.

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Requirements for getting a Crypto license in the UK

To obtain a cryptocurrency license in the UK, a company must meet the following requirements:

Registration of the organization
The company must be registered in the UK.

Presence of an office
The company must have a local office.

Record keeping
The licensee must keep records of all transactions that take place in the UK.

Appointment of a resident director
The applicant must employ a resident director with the necessary business management experience and relevant education.

Share capital
There are currently no minimum share capital requirements to obtain a cryptocurrency license.

Compliance with anti-money laundering and counter-terrorist financing (AML/CFT) regulations
This requirement includes several actions:

  • developing and implementing an AML/CFT policy;
  • implementing a KYC procedure to verify the identity and identification of customers;
  • appointing a person responsible for AML/CFT compliance and organizing internal audits.

These requirements are subject to change, so it is recommended to contact Fast Offshore Licenses lawyers for up-to-date information on crypto business licensing in the UK.

Procedure for obtaining a Cryptocurrency License registration in the UK

The procedure for obtaining registration of a cryptocurrency license in the UK includes several steps:

  • Stage 1

Applying the FCA.

In addition to the completed application form, the applicant must prepare and submit information and documents to the regulator, which includes:

  • copies of personal documents and CVs of directors and key shareholders, confirming their competence;
  • a description of the specific crypto asset activities the company plans to engage in;
  • company structure, including corporate structure and outsourcing information (if applicable);
  • the company’s charter documents, including a business plan;
  • marketing plan describing customers and sales channels;
  • developed AML/CFT measures and related risk assessment, including training materials for staff;
  • risk management policy and measures to safeguard customer funds;
  • information on key IT systems, IT security policies and procedures;
  • public keys/crypto asset wallet addresses used by the company;
  • transaction monitoring procedures;
  • record-keeping and registration procedures;
  • money laundering reporting;
  • beneficial ownership forms for company shareholders.

For a complete list of documents and filing requirements, please contact our attorneys.

  • Stage 2

Payment of the application fee.

The amount of the application fee for applying for a crypto license in the UK depends on the company’s revenue:

  • if the company’s revenue is less than £250,000 (about $324,770), the fee is £2,000 (about $2,599);
  • if the company’s revenue exceeds £250,000, the fee is £10,000 (about $12,990).
  • Stage 3

Application review.

The FCA appoints a responsible supervisor who evaluates the application from the applicant. If necessary, the applicant must provide additional information or evidence if requested by the supervisor for the application to be considered. The FCA conducts the review using various databases and information held by other regulatory bodies in the UK and overseas.

  • Stage 4

Assessment of fulfillment of minimum requirements and acceptance of the application.

If the application is approved, the regulator issues authorization to carry out crypto activities. The FCA provides written notification of this decision, including information on the type of activity authorized, the start date, and any restrictions associated with the authorization. Once the authorization process is complete, the Financial Services Registry is automatically updated.

When applying for a cryptocurrency license in the UK, there is an option to withdraw the application at the authorization stage, but in this case, the application fee is not refundable. Applicants sometimes choose to withdraw from the process if they cannot provide all the required information or cannot meet the deadlines.

If an application is rejected, the FCA will explain the reasons for its decision and refund the registration fee, after which the application can be resubmitted. The FCA has the right to suspend or cancel the registration of a cryptocurrency company at any time after the completion of the registration process if the company does not meet the requirements.

In addition to the registration fee, licensed companies are also required to pay a periodic fee, which is calculated according to a certain formula that takes into account the registration fee, the company’s valuation, and the number of calendar months. The amount of the fee will be determined by the FCA on a case-by-case basis. In the first year, authorized companies are only required to pay a portion of the fee based on the number of months remaining until the end of the fee year.

Crypto license consultant in the UK


Eugen Fomin

Types of licenses in the UK

An FCA cryptocurrency license in the UK is effectively a registration with the FCA under the AML/CTF regime. This registration is not commonly referred to as a license but can be treated as such, as it is prohibited to provide certain cryptocurrency services in the United Kingdom without this registration.

Establishing a Cryptocurrency Company in the UK

Setting up a company in the UK involves several key stages:

  • Stage 1

Choosing a business structure

Decide what type of organization you want to set up, such as a private limited company (Ltd), public limited company (PLC), or limited liability partnership (LLP).

  • Stage 2

Register a company name

Choose a unique company name that meets UK legal requirements and is not used by other organizations. You can check the availability of the name through Companies House UK.

  • Stage 3

Registered office address

You will need the address of the registered office in the UK where official documents will be sent. This address will be publicly available.

  • Stage 4

Directors and shareholders.

Appoint at least one director (the person responsible for managing the company) and one shareholder (the owners of the company). Directors must be at least 16 years of age and must not be disqualified from acting as directors.

  • Stage 5

Articles of Association and Memorandum of Association

Prepare the company’s incorporation documents, including the articles of association (describing the constitution and purposes of the company) and the memorandum of association (setting out the principles of the company).

  • Stage 6

Registration with Companies House UK.

Complete the necessary registration forms and submit them to Companies House UK along with the required registration fee, which is £50 (about $63). This can be done online, by post, or through an agent.

  • Stage 7

Registering as a taxpayer.

Register your new company for tax with HM Revenue & Customs (HMRC).

  • Stage 8

Legal and regulatory compliance

Ensure compliance with UK legislation including employment law, data protection (GDPR), health and safety requirements, and any industry regulations.

  • Stage 9

Business bank account

Open a bank account for your company to effectively manage your finances and separate them from your funds.

  • Stage 10

Employer responsibilities

If you plan to employ staff, familiarize yourself with your responsibilities as an employer, including keeping records of payroll, pension contributions and drafting employment contracts.

The process of setting up a cryptocurrency company in the UK can vary depending on the type of business and your specific circumstances. Consulting with the legal and financial experts at Fast Offshore Licenses can help you get tailored advice and ensure you are compliant.

Cryptocurrency regulation in the UK

The UK’s crypto asset legislation overlaps with EU regulations, as the country implemented the anti-money laundering (AML) and counter-terrorist financing (CFT) requirements set out in the EU’s Fifth and Sixth Directives (5AMLD and 6AMLD) before leaving the EU. This means that cryptocurrency companies that do business in this jurisdiction must comply with the Money Laundering, Terrorist Financing and Transfer of Funds Regulations 2017 (MLR). The MLR sets out the private sector’s obligations to counter money laundering risks. The regulation includes requirements for customer due diligence measures which are monitored and enforced by the Financial Conduct Authority (FCA). The customer due diligence process is described in the Know Your Customer guide.

The provision of crypto services in the UK is subject to mandatory registration with the FCA. This registration process is referred to as the FCA AML/CTF crypto asset registration regime. Although the term “license” is not officially used, registration can be considered a license, as without it, the provision of certain crypto services in the UK is prohibited. Registration with the FCA is mandatory for companies engaged in the following activities:

  • providing a crypto-trading platform (cryptocurrency exchange);
  • managing automated cryptocurrency exchange processes;
  • conducting initial coin offerings;
  • provision of crypto wallets;
  • providing cryptocurrency banking and terminal services.

The Crypto Asset Guidance (2019) provides detailed regulatory advice and final guidance from the UK FCA. This document addresses issues relating to the regulation of cryptocurrencies and the provision of crypto services, including the provision of tokens, the exchange and management of crypto assets, and the organization of ICOs.

In addition to financial regulatory requirements, the sale or offering of cryptocurrency and related services is also subject to several consumer rights laws:

These laws apply to consumers who purchase goods or services for personal use. They provide consumers with legal rights and mechanisms to obtain compensation for damages from suppliers of goods, services, and digital content. In addition, these laws place further restrictions on the types of contractual terms that can be imposed on consumers.

Crypto Taxation in the UK

Although the UK does not yet have a detailed legal framework for cryptocurrencies, the UK Revenue & Customs has already published its internal Guidance on Crypto Assets, which explains all the tax obligations associated with the use of cryptocurrency under current legislation.

The taxation of cryptocurrencies in the UK includes the following key points:

First of all, there is no specific “cryptocurrency tax” in this jurisdiction. Crypto assets are equated to shares or investments for tax purposes.

Cryptocurrency mining is taxable. Income from cryptocurrency mining is calculated based on its market value at the time of receipt.

Capital Gains Tax (CGT)

It applies when you sell or exchange your cryptocurrency at a profit that exceeds the annual capital gains tax allowance (£3,000 in the 2023/24 tax year, which is about $3,744). The CGT tax rate on crypto assets is either 10% or 20%, depending on your total taxable income. You can read more about it here.

Income Tax (IT)

It applies to any income you receive from crypto activity, such as:

  • rewards for mining cryptocurrency;
  • earning interest on cryptocurrency lending platforms;
  • receiving cryptocurrency as payment for goods or services.

Your income tax rate will depend on your total taxable income for the year.

Value Added Tax (VAT)

The sale and purchase of cryptocurrencies are usually exempt from VAT. However, other transactions, such as exchanging cryptocurrency for goods or services, may be subject to this tax.

Deduction Tax

In some cases, deduction tax may apply to the purchase of shares, land, or real estate using cryptocurrency.

Inheritance Tax

Cryptocurrency assets are considered assets and may be subject to inheritance tax if your estate exceeds the threshold of 325,000 pounds (about $405,594).

Companies are also liable to pay corporation tax on profits. There are two levels of corporation tax in the UK in 2024. The standard tax rate is 19% for corporate profits up to £50,000 (about $62,400) and 25% for corporate profits above £250,000 ($311,995). The 19% preferential tax rate applies to profits between £50,000 and £250,000. However, the preferential rate only applies to the portion of profits within this range. Profits over £250,000 are taxed at the full standard rate of 25%.

It is important to note that tax rules and guidance can change over time and it is recommended that you consult a Fast Offshore Licenses tax specialist for the most up-to-date and accurate information on cryptocurrency taxation in the UK.

FAQ about the UK Crypto license

What is a Crypto License in the UK?

Obtaining an FCA cryptocurrency license in the UK is effectively a matter of registering with the FCA under the AML/CTF regime. The term “license” is not usually used during this procedure, but the registration itself can be considered as a license, as without it certain crypto services cannot be provided in the UK.

Do you need a license to trade cryptocurrency in the UK?

Companies engaged in the following activities are required to register with the FCA:

  • providing a crypto trading platform (cryptocurrency exchange);
  • managing automated cryptocurrency exchange processes;
  • conducting initial coin offerings (ICOs);
  • provision of crypto wallets;
  • provision of cryptocurrency banking and terminal services.

If you provide all of these services, you will need to state this in your application to the FCA. In any case, there is only one license for all crypto activities.

How do I get a crypto license in the UK?

To register a cryptocurrency business in the UK as required by the FCA, you need to apply for a crypto license. Applicants must provide relevant documents and information, including a business plan, risk management policy, and key employee information, and pay an application fee. Once the application has been processed, the FCA will assess and decide whether to issue a license authorizing cryptocurrency activity in the UK.

How much is the crypto license in the UK?

The cost of obtaining a crypto license in the UK depends on the annual revenue of the company applying for the license. If a company’s annual revenue is less than £250,000 ($324,770), the registration fee is £2,000 ($2,599). For companies with annual revenues over £250,000, the registration fee is £10,000 ($12,990).

It is important to note that these rates are subject to change, so it is recommended that you contact the FCA or other official sources for the most up-to-date information on the cost of obtaining a crypto license in the UK.

How long does it take to obtain a crypto license in the UK?

If the FCA has no further questions and your application is completed by the legal requirements, the time it takes to decide on your application will be between 1 and 3 months.

What is the new legislation for crypto in the UK?

Financial analysts predict that the UK will soon introduce new licensing rules for the cryptocurrency industry. This opinion has been confirmed by the country’s economists and financiers, who consider it necessary to create their English cryptocurrency. The adoption of clear and understandable laws that exclude different interpretations will allow law-abiding exchanges to strengthen their position in the relevant jurisdiction and increase confidence in the regulators. For the most up-to-date information on cryptocurrency regulation in this and other jurisdictions, we recommend contacting Fast Offshore Licenses lawyers.

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