Don't invest unless you're prepared to lose all the money you invest. This is a high-risk investment and you should not expect to be protected if something goes wrong. Take 2 mins to learn more.
Estimated reading time: 2 min
Due to the potential for losses, the Financial Conduct Authority (FCA) considers this investment to be high risk.
What are the key risks?
1. You could lose all the money you invest
The performance of most cryptoassets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in cryptoassets.
The cryptoasset market is largely unregulated. There is a risk of losing money or any cryptoassets you purchase due to risks such as cyber-attacks, financial crime and firm failure.
2. You should not expect to be protected if something goes wrong
The Financial Services Compensation Scheme (FSCS) doesn't protect this type of investment because it's not a 'specified investment' under the UK regulatory regime – in other words, this type of investment isn't recognised as the sort of investment that the FSCS can protect. Learn more by using the FSCS investment protection checker.
The Financial Ombudsman Service (FOS) will not be able to consider complaints related to this firm or Protection from the Financial Ombudsman Service (FOS) does not cover poor investment performance. If you have a complaint against an FCA regulated firm, FOS may be able to consider it. Learn more about FOS protection here.
3. You may not be able to sell your investment when you want to
There is no guarantee that investments in cryptoassets can be easily sold at any given time. The ability to sell a cryptoasset depends on various factors, including the supply and demand in the market at that time.
Operational failings such as technology outages, cyber-attacks and comingling of funds could cause unwanted delay and you may be unable to sell your cryptoassets at the time you want.
4. Cryptoasset investments can be complex
Investments in cryptoassets can be complex, making it difficult to understand the risks associated with the investment.
You should do your own research before investing. If something sounds too good to be true, it probably is.
5. Don't put all your eggs in one basket
Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on any one to do well.
A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
If you are interested in learning more about how to protect yourself, visit the FCA's website here.
For further information about cryptoassets, visit the FCA's website here.
Kraken is the smaller of the 2 exchanges, with 9 million users compared to Coinbase’s 98 million. Where Coinbase is known for its beginner-friendly approach, Kraken is more focused on advanced traders. With a number of Kraken’s services not available in the UK, does it have enough on offer to compete with Coinbase?
Kraken is one of the crypto exchanges registered (as Payward Ltd) with the UK Financial Conduct Authority (FCA). While crypto isn’t regulated in the UK, it does mean that Kraken has passed checks for anti-money laundering and terrorism financing. Only crypto companies operating in the UK need to register. The FCA has banned crypto platforms from selling crypto derivatives to UK users. As a lot of Kraken’s advanced trading services are focused on margin trading and futures, there is quite a lot of it that you won’t be able to use as a UK resident.
Kraken and Coinbase are pretty evenly matched when it comes to coins. There is support for the major coins on both exchanges, but also a large number of niche coins. You are most likely to find what you need with either platform.
Coinbase’s size and global reach mean that it wins when it comes to the number of fiat currencies supported. Kraken does cover the popular ones – most importantly GBP – but Coinbase has more variety in the mix.
Winner: Coinbase
Round 4: Fees
Minimum deposits
£1
£50
Deposit Fees
Cash: £0–£21 depending on method of deposit Cryptocurrency: Mostly free but requires a minimum balance to deposit
Cash: £1.95 - £35 depending on method of withdrawal (min. withdrawal £5) Cryptocurrency: Minimum withdrawal requirement and flat-rate withdrawal fee that varies for each cryptocurrency
Coinbase can be a bit confusing when it comes to fees. It’s not particularly transparent, which makes it hard to know how much you’ll pay for each transaction. Overall, its deposit fees are higher than Kraken’s but its trading fees are lower. Kraken is quite pricey – charging a trading fee as well as a spread, which can add up quickly. However, both platforms have Pro versions which offer discounted fees for frequent traders.
Winner: Coinbase
Round 5: Wallets
Kraken doesn’t provide a personal wallet service. Instead, it allows you to deposit funds into its corporate wallet while the funds are being exchanged or used for staking. In stark contrast, Coinbase has a self-custody wallet so you can remain in complete control of your cryptoassets. It’s separate from the Coinbase exchange, although it is compatible to use with your Coinbase account.
Winner: Coinbase
Round 6: Ease of Use
Kraken is a solid choice for users who want to expand their knowledge of cryptocurrency. However, its UI is geared more towards advanced trading and can be overwhelming for a new trader who is unfamiliar with charting or some of the terminology. Coinbase is well-known for having a beginner-friendly interface and the volume on the exchange makes it easy to quickly buy or sell at any time.
Winner: Coinbase
Round 7: Security
The size and scale of both platforms mean that they’re considered some of the most secure. Coinbase did experience a hack in October 2021, but all affected customers were reimbursed. Both have insurance in place and conduct regular security audits. Kraken slightly edges it, since it has never experienced a hack and the fact it is on the FCA’s cryptoasset firm register.
Winner: Kraken
Verdict: Is Coinbase better than Kraken?
Coinbase wins overall but they’re both strong contenders. They have a wealth of educational resources and a good amount of supported coins, and are established enough to make buying and selling crypto easy. Coinbase just edges out Kraken, though, for its ease of use and more competitive fees. Kraken is more set up for advanced traders, so if you’re a beginner this may be overwhelming. Added to this, UK users aren’t eligible for some of its services, so you may find more value using Coinbase.
*Cryptocurrencies aren't regulated in the UK and there's no protection from the Financial Ombudsman or the Financial Services Compensation Scheme. Your capital is at risk. Capital gains tax on profits may apply.
Cryptocurrencies are speculative and investing in them involves significant risks - they're highly volatile, vulnerable to hacking and sensitive to secondary activity. The value of investments can fall as well as rise and you may get back less than you invested. Past performance is no guarantee of future results. This content shouldn't be interpreted as a recommendation to invest. Before you invest, you should get advice and decide whether the potential return outweighs the risks. Finder, or the author, may have holdings in the cryptocurrencies discussed.
Kate Steere is an editor at Finder, specialising in fintech, banking and cryptocurrency. She has previously written for The Motley Fool UK and Fitch Solutions, where she covered a wide range of personal finance topics and kept a close eye on market trends. Kate has a Bachelor of Arts in Modern History from the University of East Anglia. When not working, she can usually be found curled up with a good book or heading out for a run.
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