Cryptoassets may not be regulated financial products, so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.
Cryptoassets are still relatively new, so it’s no surprise that they’re surrounded by myths. From how much risk is involved to how to manage crypto as part of your wider financial plan, misinformation could make it difficult to understand how crypto might fit into your strategy.
Here are some myths you might have read when researching crypto.
1. Crypto is a fad
Crypto is still niche, but it is becoming an established part of financial plans for many people. Indeed, data from the Financial Conduct Authority (FCA) suggests 8% of people own cryptoassets (1 December 2025).
While it’s impossible to predict the future, crypto appears to be more than a fad. However, that doesn’t mean investing in crypto is the right choice for everyone.
2. Crypto provides a way to generate high investment returns
Part of the allure of cryptoassets is the perceived high returns. While it’s true that some investors have made substantial amounts, this isn’t the case for every crypto investor. In fact, you can find stories of investors losing all their money alongside those who celebrated returns.
All investments carry risk, and cryptoassets are considered high risk. That means there’s a chance that the asset will experience greater volatility and you could lose your initial investment. It’s important to understand your risk profile before investing in any asset to assess whether it’s appropriate for you.
3. Crypto should not be part of your financial plan
While crypto might feel separate from your wider financial plan, it often makes sense to include all your assets.
Whether you decide to invest in crypto might affect how you manage other assets. For example, as crypto is high risk, you might take a more conservative approach with other investments to reflect this. It’s also important to understand how your goals might be affected if your crypto doesn’t deliver the returns you expect.
Making financial decisions in isolation could lead you to miss opportunities or overlook risks.
4. You don’t need to pay tax on crypto returns
If you believe that cryptoassets won’t attract tax, it’s easy to see why they could be attractive. Yet, this often isn’t the case.
Cryptoassets are typically treated like shares rather than cash. As a result, depending on your circumstances, the money you make from crypto could be liable for Income Tax and Capital Gains Tax (CGT).
If you intend to leave cryptoassets to a loved one when you pass away, they may also be subject to Inheritance Tax if your entire estate exceeds certain thresholds.
You’ll usually have to report earnings to HMRC by completing a Self Assessment tax return or using the real-time CGT service. It’s important to keep accurate records of your gains and disposals.
5. Crypto is unregulated
Cryptoassets aren’t subject to as many regulations as other assets you might invest in. They are not covered by the Financial Ombudsman Service or the Financial Services Compensation Scheme.
However, crypto isn’t entirely unregulated. There are regulations that crypto firms must adhere to regarding anti-money laundering, counter-terrorism financing, and financial promotions when advertising products to UK consumers.
The regulations that crypto firms are subject to are set to change significantly. From 25 October 2027, major crypto activities, including trading, custody, and staking, will fall under an official FCA framework.
The FCA (30 June 2026) notes that the new regulations will mean firms will be held to similar standards to other financial providers, but risk cannot be regulated away.
Contact us
If you’d like to talk about investing, including potentially in cryptoassets, please get in touch. We could assess your risk profile and goals to provide guidance on which investments may be right for you.
Please note: This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Cryptoassets may not be regulated financial products, so please be aware that trading them carries a considerable amount of risk for your capital. Cryptocurrencies are also not covered by existing consumer protection laws and are not suitable for the majority of investors.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
The Financial Conduct Authority does not regulate tax planning.
