Unlike the currency you use every day, which is backed by central banks, most crypto assets are not regulated and can be subject to sudden market moves or failure. They’re also not protected by the Financial Services Compensation Scheme (FSCS), so investing in them can be a risky proposition.

In addition, Avoiding scams in UK crypto is using the popularity of crypto to launch a range of scams. This includes promising high returns on investments that are purely fraudulent and could see you lose your money. Getting scammed can be extremely distressing and, in some cases, financially devastating.

How to Avoid Crypto Scams in the UK: A Practical Guide

Scams are often advertised on social media and cold called, so it’s essential to take your time and do your research before investing large sums of money. Always check the FCA register to find out if a firm is authorised and if they have a licence to offer investment opportunities. If the contact details on their website are different to those on the FCA register, this is a good indication that they’re not authorised and you should avoid them.

Another issue with crypto is that it’s hard to track the source of funds, which makes it easy for criminals to launder money through it. In response to this, HMRC has a data sharing programme with some exchanges that allows them to share KYC information and transaction details with tax authorities.

So, while there’s still a lot of work to be done, the UK is moving in the right direction when it comes to protecting consumers. The introduction of the new laws will help to ensure that most crypto activities are brought under established financial regulations, and that there’s a clear framework around market conduct, stability, taxation, crime and other aspects.