Is Bitcoin legal in the United Kingdom?
No specific regulations govern trading and investment in Bitcoin. However, United Kingdom residents can transact using Bitcoin.
Unlike El Salvador, which considers Bitcoin (BTC) to be a legal tender, cryptocurrencies are not treated as currency in the United Kingdom. Instead, HM Revenue & Customs (HMRC) categorized cryptocurrencies as digital or crypto assets, which may be liable to capital gains tax or income tax, depending on the circumstances.
One can trade BTC via cryptocurrency exchanges such as U.K.-based CEX.io or globally based Coinbase or Binance or through brokers like eToro. However, to register a cryptocurrency exchange in the U.K., the financial conduct authority (FCA) requires the business to establish a legal entity, get a registered office address, open a business bank account and register for taxation. After this, they will need to obtain a crypto exchange license by filling out an application form accessible on the FCA’s website and paying a registration fee.
So, can U.K.-based businesses accept Bitcoin? Yes, businesses can accept Bitcoin payments in the U.K. directly or indirectly via gift cards. However, it depends upon the customer base if they want to pay in crypto or fiat currencies.
Who accepts Bitcoin in the United Kingdom?
United Kingdom companies that accept Bitcoin include Lush, Etsy, Microsoft, Shopify, CheapAir and others.
Lush, a cosmetics company established in the U.K., accepts BTC payments to increase the number of available payment methods worldwide. But does Amazon accept Bitcoin in the U.K.? And how do businesses accept Bitcoin payments?
Bitcoin payments are not directly accepted by Amazon. However, it is possible to buy Amazon gift cards that may be used to make purchases on the Amazon UK website through Bitcoin payment service providers like BitPay and CoinGate.
Similar to Amazon, Lush accepts crypto payments in the U.K. via BitPay. Users usually need to go through basic steps as follows:
- Select BitPay during checkout.
- Get the BitPay Wallet app or connect your preferred wallet.
- Choose Bitcoin from the available options.
- To finish your transaction, manually enter the transaction details or scan the QR code.
- One will be able to track their order in their wallet’s purchases.
If someone wants to buy an Xbox gift card with crypto, they will need to follow the below steps:
- Download the BitPay app or BitPay extension.
- Select a gift card to purchase.
- Decide how much money you want to put on the gift card.
- Pay for your gift card with Bitcoin.
- After payment is verified, you will receive your gift card instantly for use at the Microsoft Store, on Xbox or on Windows.
On the contrary, although Etsy does not have its own platform for accepting Bitcoin as payment, independent merchants using Etsy are free to offer BTC as a payment method option during checkout. Similarly, in the e-commerce world, Shopify allows online sellers to accept crypto payments in the United Kingdom.
Other companies like CheapAir, eBay and Starbucks also accept BTC or payments in other cryptocurrencies via Bitcoin payment service providers, and the steps are almost similar as mentioned above.
What can you buy with Bitcoin in the United Kingdom?
One can make Bitcoin payments to buy a cup of coffee, pizza, cosmetics, cars, mobile phones and flight tickets.
Bitcoin debit cards that are similar to prepaid cards allow cryptocurrency enthusiasts to make payments in BTC. Retailers are paid in cash in their local currency, for instance, the Great British pound in the United Kingdom, if customers make payments in BTC in person or online. That said, Bitcoin debit cards function like traditional credit cards for payment purposes.
Moreover, a U.K.-based prepaid cryptocurrency Mastercard called CoinJar card can be used at any merchant site that accepts Google Pay or Apple Pay to make purchases. In addition, one can use their physical CoinJar card in locations that do not yet accept contactless payments.
Other popular ways to spend Bitcoin in the U.K. involve donating it to charity, buying advanced mining equipment or purchasing additional BTC or altcoins to grow an investment portfolio. However, the Financial Ombudsman Service and the Financial Services Compensation Scheme (FSCS) are unlikely to be accessible to anyone making a Bitcoin payment in the United Kingdom, according to the Financial Conduct Authority. This implies that if something goes wrong with their purchase, they probably won’t get compensation or a resolution.
A free and simple-to-use service called the Financial Ombudsman Service handles disputes between customers and companies that offer financial assistance. Similarly, customers of authorized financial services companies are covered by the Financial Services Compensation Scheme, which is a legal deposit insurance and investors compensation scheme in the United Kingdom. This means that FSCS may pay compensation if a firm cannot pay claims against it or is likely unable to do so.
What are the pros and cons of accepting Bitcoin payments?
Accepting Bitcoin payments is advantageous due to lower fees than credit and debit cards, expansion of customer base and real-time bank balances. However, risks like volatility and cybercrime may undermine these benefits.
Cryptocurrency payments help save excessive credit and debit card processing fees as they are decentralized and do not need intermediaries to verify the transaction. Moreover, merchants do not incur overseas currency exchange changes if payments are made in BTC or other cryptocurrencies.
High transaction speed is another benefit of accepting Bitcoin payments, allowing businesses to receive payments in real-time. Moreover, with the increasing customer demand to pay in crypto, offering Bitcoin as a payment method will help acquire more shoppers.
However, accepting cryptocurrency payments impose tax implications on businesses. For instance, any earnings from cryptocurrency as income will be subject to income tax: a beginning rate of 19% and an intermediate rate of 21% for residents in Scotland, or 0% to 45%, depending on one’s tax band in Wales, England and Northern Ireland.
Another negligible point while considering accepting Bitcoin payments is the volatile nature of the crypto market, i.e., sharp and abrupt price movements might result from unanticipated shifts in market sentiment.
Additionally, hackers can steal funds from cryptocurrency wallets using tricks like sending phishing emails or redirecting victims to fake websites. Therefore, any business that wants to accept BTC or other cryptocurrencies as payment methods should assess the risks and returns before making any decision.