Are cryptoassets protected by the FSCS?

Most cryptoassets are not protected by the Financial Services Compensation Scheme (FSCS). That includes Bitcoin and other virtual currencies, which are not regulated by the Financial Conduct Authority (FCA)¹. If a crypto exchange or wallet provider goes out of business, there is generally no scheme compensation to claim.

The FSCS is the body that gives automatic protection up to £120,000 if a UK-authorised bank, building society or credit union fails³. It covers deposits, insurance, investments, pensions, mortgage advice and certain other regulated services when a UK-authorised firm fails⁴. Cryptoassets are not on that list, because buying and holding most of them is not a regulated activity.

The practical effect is that crypto sits outside the safety net that covers ordinary savings and regulated investments. You may also find you cannot take a complaint to the Financial Ombudsman Service if something goes wrong⁵. This page explains where the line falls, what happens when an exchange collapses, and what protection, if any, applies.

Most cryptoassets are not FSCS protected

The FSCS states plainly that crypto assets are virtual currencies and not FCA regulated, which means they are not FSCS protected¹. Its own guidance goes further: most cryptoassets are not FSCS protected because they are not regulated, and this includes virtual currencies such as Bitcoin and Litecoin².

The FCA's rulebook sets out the same position in the risk warnings that firms must give customers. For qualifying cryptoassets, it says the Financial Services Compensation Scheme does not protect this type of investment because it is not a "specified investment" under the UK regulatory regime⁸. The same wording applies to cryptoasset exchange traded notes admitted to trading on a UK recognised investment exchange⁸.

Independent guidance agrees. Most cryptocurrencies are not regulated by the FCA, so they are not protected by the UK's Financial Services Compensation Scheme⁹. Cryptocurrency fraud losses mostly are not covered by the scheme either¹⁰.

The reason is structural rather than a gap that could be closed by a claim. FSCS protection applies only where the authorised firm's activity is regulated by the Prudential Regulation Authority or the FCA¹¹. Holding crypto is not one of those activities, so there is no firm failure of a regulated activity for the scheme to respond to.

Why the FSCS does not cover Bitcoin and other cryptocurrencies

The FSCS can only protect money held by UK branches of authorised banks and building societies¹². It cannot protect e-money firms or payment services firms¹³. The FCA made the same point when Premier Payment Solutions Ltd entered liquidation, stating that the FSCS only applies to certain types of activity and does not cover payment services¹⁴.

Cryptoassets appear on the FSCS's own list of exclusions, alongside peer-to-peer lending, money held on pre-paid credit cards, Christmas or other savings clubs, boiler room scam investments, losses from investment performance, some electronic payment services or currency bureaux, and several classes of insurance¹⁵. None of these is covered, for the same underlying reason: the activity is not one the scheme was built to respond to.

There is a further limit that catches some crypto-adjacent firms. FSCS protection applies at firm level and may be shared across brands under the same authorisation¹³. So even where a firm holds a licence for one activity, that does not extend protection to everything it sells.

Where the rules differ across the UK, the FSCS framework is UK-wide, so the position on cryptoassets is the same in England, Scotland, Wales and Northern Ireland.

When a crypto exchange or wallet provider goes out of business

If a crypto exchange or wallet provider fails, the FSCS is not the route to compensation. The scheme's own guidance is that it cannot protect you if an e-money firm or payment services firm fails¹². Many exchanges and wallet providers operate through exactly those structures.

What happens instead depends on how the firm was set up. Where customer funds are held by an electronic money institution, they are generally protected through safeguarding rather than FSCS deposit protection¹⁶. Safeguarding means your money is kept separate from the firm's own money, but it is not insurance. If the firm fails, you would typically need to make a claim to the administrator, and there is no guarantee of recovering everything.

That distinction matters because it is easy to assume a familiar-looking app is a bank. MoneyHelper notes that if an account is not a bank account, it is likely to be a virtual current account covered by e-money rules, meaning your money is kept safe at a different bank, but you would need to make a claim to the administrator if your provider failed¹⁷. Some providers are explicit about the gap: Monese customers do not have access to the FSCS if the firm goes bust¹⁸.

For crypto specifically, the position is starker. Cryptoassets are unregulated, so if something goes wrong, money held in crypto wallets is not protected by the Financial Services Compensation Scheme¹⁹. The same is stated by providers themselves: money held in crypto wallets is not protected by the FSCS⁶.

What happens when a crypto exchange fails.

Investing in cryptoassets is high-risk: what that means for you

The FCA has warned that investing in cryptocurrency assets generally involves taking very high risks¹⁹. The protection gap is part of that risk, not separate from it. If you put money into unregulated investments, you will not be covered by the FSCS unless the investment was the result of negligent advice from an independent financial adviser²⁰.

That last point is the main exception worth knowing. The FSCS protects pension advice, so it can pay compensation if your adviser fails in that area²¹. It also protects mortgage advice²². If you were advised by an independent financial adviser to move money into crypto and that advice was negligent, a claim may lie against the adviser rather than the crypto itself. The FSCS publishes a guide to investment protection and an investment protection checker to help you work out whether a particular firm or activity is covered¹¹.

For comparison, the protection that does exist is specific and capped. Deposits are protected up to £120,000 per person or company, per authorised firm³. Temporary high balances from a qualifying life event can be protected up to £1.4m for six months¹³. Business accounts get £120,000 in total across all accounts held in the business name, with joint holders of a business account getting protection in addition to their individual protection²⁴. None of this reaches cryptoassets.

If you are worried about a crypto investment or have lost money, free and impartial help is available. MoneyHelper offers guidance on choosing financial products¹⁷, and the FSCS has a checker to confirm whether a firm or product is protected¹³. For fraud, Action Fraud is the national reporting centre, and Take Five sets out the warning signs of crypto and investment fraud¹⁰.

Crypto ETNs and Innovative Finance ISAs

Crypto exchange-traded notes are sometimes described as a way to get crypto exposure inside a tax wrapper. They are not FSCS protected. The FSCS does not protect this type of investment because it is not a type of investment that the FSCS can protect⁷. Notes described as high-risk complex products are highly volatile and are not FSCS protected²⁵.

Since 6 April 2026, crypto ETNs, funds that invest in cryptocurrencies, can be held in Innovative Finance ISAs²⁶. Holding an investment inside an ISA changes its tax treatment, not its protection status. An ISA wrapper does not bring an asset inside the FSCS.

The same logic applies to peer-to-peer lending, which can also sit in an Innovative Finance ISA. Peer-to-peer platforms are not protected by the Financial Services Compensation Scheme should they collapse²⁶. If you are weighing up whether a product is covered, the FSCS investment protection checker is the place to start²³.

Where FSCS protection does apply

It is worth being clear about what the scheme does cover, because the boundary is not arbitrary. The FSCS covers a range of financial products if a UK-authorised financial firm fails, including deposits, insurance, investments, pensions, mortgage advice and certain other regulated services⁴.

Funeral plans are a useful illustration of how the scheme expands over time. If you have a funeral plan and your provider went out of business on or after 29 July 2022, you may be FSCS protected, including plans bought before that date²⁸. That change came from regulation, not from the scheme deciding to widen its remit on its own.

The same pattern has not happened for cryptoassets. Until the activity itself is brought within regulation, the FSCS has no basis to pay. If you want to check whether a particular firm or product is protected, the FSCS checker and its guide to investment protection set out the tests¹³.