This comprehensive guide outlines various methods for generating passive income from cryptocurrency, focusing on how each works, their benefits, and associated risks. It aims to help investors, from beginners to experienced traders, make informed decisions to diversify their portfolios and potentially enhance returns.
Generating Passive Income with Cryptocurrency: A UK Perspective
The world of cryptocurrencies presents compelling opportunities for wealth creation with minimal barriers to entry—often, all that’s required is an internet connection. While much of the activity centres on trading prominent digital assets like Bitcoin or Solana, a growing number of investors are actively seeking ways to generate passive income, allowing their digital holdings to work for them.
This article delves into the most effective strategies for earning passive income from crypto, encompassing staking, yield farming, and crypto lending. We’ll demystify each method, highlight its advantages, and dissect its inherent risks, empowering you to make well-informed investment choices. Whether you’re a seasoned crypto enthusiast or just embarking on your digital asset journey, these strategies can serve to diversify your investments and potentially amplify your returns.
Passive Crypto Income at a Glance
Understanding Passive Income in the Crypto World
Passive income refers to earnings generated from an endeavour in which an individual is not actively or directly involved on a day-to-day basis. Within the context of cryptocurrencies, passive income can be realised through various mechanisms, including staking, lending, mining, and contributing to network operations. The fundamental principle is to grasp the underlying process and select a method that aligns with your investment objectives and appetite for risk.
The potential returns from generating passive income with cryptocurrencies can fluctuate significantly. Staking and lending typically offer regular interest payments, while mining provides rewards in newly minted coins. Returns are influenced by factors such as the cryptocurrency’s price movements, network demand, your level of participation, and prevailing market conditions.
To effectively generate passive income in this space, it is advisable to diversify your strategies, remain well-informed about the evolving crypto market, and consistently review your progress and chosen approaches.
Detailed Exploration of Passive Income Methods
1. Staking
Staking is a widely adopted method for generating passive income, largely due to its comparatively lower risk profile. It involves holding and “locking up” a specified amount of cryptocurrency within a compatible wallet to bolster the operations and security of a Proof-of-Stake (PoS) blockchain network.
Your participation in a PoS network earns you regular and often predictable rewards, making staking an appealing passive income option if stability is a priority. However, depending on the specific blockchain, staking may necessitate a substantial initial investment, and some platforms may impose lock-up periods, restricting access to your funds. Additionally, staking returns can be affected by the network’s overall performance and fluctuations in the token’s market price.
Despite these considerations, we rate staking’s efficiency as moderate to high, contingent on the specific network and its prevailing conditions.
Factors Influencing Returns:
- Network Participation: An increase in the number of participants staking can lead to a dilution of individual rewards.
- Staking Period: Longer staking periods can often yield higher returns, though this comes with reduced liquidity of your funds.
- Token Price Volatility: Significant changes in the market value of the staked tokens can materially impact the actual value of your earned returns in fiat currency.
- Platform Fees: Fees charged by staking pools or platforms can reduce your net earnings.
- Lock-up Periods: Longer lock-up commitments may offer more attractive returns but will limit your ability to access your funds.
How to Get Started:
- Choose a Staking-Supported Cryptocurrency: Select a cryptocurrency that operates on a Proof-of-Stake consensus mechanism, such as Ethereum (ETH) 2.0, Cardano (ADA), or Polkadot (DOT).
- Set Up a Compatible Wallet: Configure a staking-compatible wallet and transfer your chosen cryptocurrency into it.
- Delegate or Stake Independently: Delegate your tokens to a staking pool (often more accessible for smaller holdings) or, if you have sufficient capital and technical expertise, set up your own validator node, following the network-specific instructions.
- Lock Tokens: Securely lock your tokens within the staking wallet to commence earning rewards.
- Claim Rewards: Periodically claim your staking rewards in accordance with the network’s procedures.
UK Tax Implications for Staking: In the UK, staking rewards are generally treated as Income Taxable at their value in GBP at the time of receipt. If staking is part of a “trade” (which is rare for individual investors), National Insurance Contributions might also apply. Subsequent disposal of these earned tokens would then be subject to Capital Gains Tax (CGT) if a profit is made.
2. Yield Farming
Yield farming involves strategically lending or staking cryptocurrencies on decentralised finance (DeFi) platforms to earn returns, often in the form of interest or additional tokens, by supplying liquidity to various protocols. This method is appealing for passive income generation due to its potential for high returns and the flexibility it offers to shift assets between different platforms to capitalise on the most favourable yields. By actively monitoring the DeFi landscape, you can potentially maximise your earnings by reallocating assets to more profitable opportunities as they emerge.
However, yield farming carries substantial risks stemming from the volatile nature of crypto markets and potential vulnerabilities in smart contracts, which could lead to significant losses. There’s also the risk of impermanent loss, a phenomenon where the value of assets in a liquidity pool can diverge from simply holding those assets outside the pool.
We categorise yield farming as an advanced passive income strategy, best suited for investors with a higher tolerance for risk. Its efficiency and potential returns can be considerable but are highly dependent on individual strategies and a thorough understanding of the dynamic DeFi ecosystem.
Factors Influencing Returns:
- Platform Yields: Different platforms offer diverse yield rates, incentives, and reward structures.
- Asset Volatility: Price volatility influences returns; more stable assets typically provide steadier yields.
- Fees: Transaction fees, platform fees, and “gas fees” (network transaction costs) can reduce net returns.
- Smart Contract Risk: Vulnerabilities or hacks within the smart contracts underpinning DeFi protocols can result in substantial losses.
- Commitment Period: The duration for which assets are committed to yield farming can affect returns, with longer durations often leading to higher cumulative rewards.
How to Get Started:
- Choose Reputable DeFi Platforms: Select well-established DeFi platforms like Uniswap, Aave, or Compound.
- Use a Secure Wallet: Ensure you use a secure and compatible crypto wallet such as MetaMask or Trust Wallet.
- Transfer Crypto and Link Wallet: Transfer the necessary cryptocurrencies to your wallet and connect it to your chosen DeFi platform.
- Select a Liquidity Pool: Choose a liquidity pool based on factors like potential returns and the stability of the assets involved.
- Deposit Assets: Deposit your assets into the chosen pool.
- Claim/Reinvest Rewards: Periodically claim and either reinvest your earned rewards or diversify them into other assets.
UK Tax Implications for Yield Farming: Earnings from yield farming, similar to staking rewards, are generally subject to Income Tax on their value in GBP at the time of receipt. The intricacies of various yield farming strategies can lead to multiple taxable events, even when simply re-investing rewards or swapping tokens. Any subsequent sale of these earned tokens will then be subject to Capital Gains Tax. Impermanent loss, while a real financial impact, is not a capital loss for tax purposes until the pooled assets are withdrawn and disposed of.
3. Crypto Lending
Crypto lending allows you to generate stable and predictable interest income by lending your cryptocurrency to borrowers through dedicated platforms, such as BlockFi (though now subject to regulatory scrutiny), Celsius (now defunct, highlighting risks), or Nexo. The primary benefit of this method is the ability to retain ownership of your underlying assets while still earning returns.
However, crypto lending carries its own set of risks. There is counterparty risk, where the borrower may default on the loan, and platform risk, where the lending platform itself could encounter liquidity issues, become insolvent, or be subject to a hacking incident, directly impacting your returns or even the safety of your principal.
Important Note for UK Investors: Crypto lending platforms are generally not covered by the Financial Services Compensation Scheme (FSCS) in the UK. This means that if a platform fails, your funds are not protected up to a certain amount as they would be with a traditional bank account. This significantly elevates the risk profile compared to regulated financial products.
Despite these risks, we consider crypto lending a potentially attractive option for those seeking passive income in the crypto space while maintaining a degree of control over their investments.
Factors Influencing Returns:
- Interest Rates: Interest rates offered by lending platforms can vary substantially between providers and for different cryptocurrencies.
- Borrowing Demand: Higher demand for borrowing specific cryptocurrencies typically translates to better interest rates for lenders.
- Platform Stability and Reputation: The stability, security measures, and overall reputation of the lending platform are crucial indicators of risk and potential returns.
- Loan Terms: Longer loan terms can sometimes lock in higher interest rates but reduce the liquidity of your funds.
- Borrower Risk Profile: The risk profile of borrowers influences the likelihood of defaults and, consequently, the interest rates offered.
- Collateral: The type and amount of collateral required by the platform impact the security of the loan.
- Platform Fees: Fees charged by the lending platform will reduce your net returns.
How to Get Started:
- Choose a Reputable Platform: Carefully select a crypto lending platform. Thoroughly compare their offered interest rates, terms, and critically, their security measures and regulatory compliance (or lack thereof).
- Transfer Crypto: Transfer your cryptocurrency from your personal wallet to the chosen lending platform.
- Select Lending Terms: Choose the lending terms that align with your preferences, including the duration of the loan and the amount you wish to lend.
- Initiate Lending: Follow the platform’s instructions to initiate the lending process. Your crypto will then be lent out to borrowers, and you will begin to earn interest.
- Monitor and Manage: Regularly check your account to monitor your interest earnings and decide whether to withdraw them or reinvest for compounded returns.
UK Tax Implications for Crypto Lending: Interest earned from crypto lending is generally treated as Income Taxable at its value in GBP at the time it is received. While similar to traditional bank interest, it’s crucial to remember the lack of FSCS protection.
4. Liquidity Pools
Liquidity pools are integral to providing liquidity to decentralised exchanges (DEXs) and the broader DeFi ecosystem. By contributing your crypto assets to these pools, you can earn passive income from a share of the trading fees generated, in addition to potential protocol rewards.
This method carries the risk of impermanent loss, a situation where the value of your assets within the pool can decrease relative to simply holding them outside the pool due to price fluctuations. Managing and monitoring liquidity pools can also be a complex undertaking, demanding constant attention to market conditions and the pool’s performance.
Despite these complexities, the efficiency of liquidity pools can range from moderate to high, largely dependent on the trading volume within the pool and its overall performance. For those willing to navigate the complexities and risks, liquidity pools offer a compelling opportunity to earn passive income while actively contributing to the growth and stability of decentralised finance.
Factors Influencing Returns:
- Trading Volume: Higher trading volumes within the pool generate more fees for liquidity providers.
- Asset Pair Stability: The types and ratios of assets in the pool affect its stability and the potential for impermanent loss.
- Trading Fees: The proportion of fees collected from trades within the pool directly contributes to your returns.
- Incentives/Rewards: Additional incentives or rewards offered by the platform can significantly boost returns.
- Platform Fees: Any fees charged by the platform can reduce your net returns.
- Pool Size: Larger pools may dilute individual returns but can offer greater stability.
How to Get Started:
- Choose a DeFi Platform: Select a reputable DeFi platform that supports liquidity pools, such as Uniswap, SushiSwap, or Balancer. Compare their pools, rewards, and fees.
- Link Your Wallet: Connect your secure crypto wallet to the chosen DeFi platform.
- Choose a Liquidity Pool: Select a liquidity pool that matches the cryptocurrencies you hold and offers favourable returns.
- Deposit Tokens: Deposit your tokens into the liquidity pool, ensuring you understand the pool’s specific terms and potential risks.
- Monitor Performance: Regularly check your liquidity position, earned returns, and the pool’s performance. Stay aware of market conditions that could impact your investment.
- Claim Rewards: Periodically claim any earned rewards or trading fees. Some platforms require manual claiming, while others distribute automatically.
- Manage Liquidity: Decide whether to withdraw your liquidity and rewards or reinvest them.
UK Tax Implications for Liquidity Pools: Providing liquidity to a pool can be a complex area for tax. Generally, earnings from trading fees and protocol rewards are treated as Income Taxable. The act of adding or removing liquidity can also trigger Capital Gains Tax events, especially if there’s a change in the value of the assets you initially deposited or if impermanent loss is realised upon withdrawal. Record-keeping is paramount here.
5. Masternodes
Operating a masternode offers the potential for high passive rewards by performing crucial network functions, including facilitating instant transactions, enhancing privacy features, participating in network governance and voting, and bolstering overall network stability and security. However, this method typically demands a significant initial investment (often a substantial amount of the underlying cryptocurrency) and a good level of technical knowledge to set up and maintain.
Furthermore, there are ongoing maintenance and operational costs (e.g., server hosting, electricity) that must be consistently managed to ensure the node runs smoothly.
If these benefits and stringent requirements align with your profile, masternodes can indeed be a highly effective method for generating passive crypto income.
Factors Influencing Returns:
- Network Health: The overall health, activity level, and demand for the blockchain network.
- Reward Distribution: The number of rewards allocated per block and how they are distributed among active masternodes.
- Token Cost: The cost of acquiring the required number of tokens to operate a masternode.
- Operational Costs: Expenses associated with running and maintaining the server, such as electricity and hosting fees.
- Uptime: Consistent operation and availability of the masternode; downtime can lead to missed rewards.
- Number of Masternodes: The total number of active masternodes, which can affect the share of rewards each node receives.
- Policy Changes: Changes in network policies or reward structures decided by the community or developers.
How to Get Started:
- Select a Masternode-Supported Cryptocurrency: Choose a cryptocurrency that specifically supports masternodes, such as DASH, PIVX, or Zcoin. Research factors like initial investment requirements, reward structures, and network stability.
- Set Up a Reliable Server: Establish a robust server environment to host the masternode. This could be a dedicated physical server, a Virtual Private Server (VPS), or a cloud server.
- Install Masternode Software: Download and install the official masternode software from the project’s website, following their detailed instructions for configuration.
- Lock Tokens: Transfer the required collateral tokens to your wallet and follow the specific instructions to initiate the masternode setup, which often involves locking the tokens at a designated address.
- Operate Masternode: Begin operating the masternode according to the project’s startup procedures.
- Monitor and Maintain: Regularly monitor the status of your masternode to ensure smooth operation. Perform necessary updates and maintenance to prevent downtime.
- Claim Rewards: Claim and manage your earned rewards.
UK Tax Implications for Masternodes: Similar to staking, rewards earned from running a masternode are typically treated as Income Taxable at their GBP value when received. The initial investment in the cryptocurrency itself would be subject to Capital Gains Tax upon disposal. Operational costs and expenses related to running the masternode may be deductible if the activity is considered a trade.
6. Dividend-Paying Tokens
Dividend-paying tokens closely resemble the passive income generation mechanisms found in traditional financial products. They offer the distinct advantage of providing regular dividends, usually in the form of additional tokens, allowing you to participate in the success of the underlying project much like a company pays dividends to its shareholders. Essentially, all you need to do is “HODL” (hold).
These tokens can provide a steady income stream as long as the underlying project performs well. However, the dividend amounts can vary significantly based on the project’s profitability and performance, introducing an element of unpredictability. There’s also the inherent risk of project failure or the token’s devaluation, which would impact both the value of your dividends and your initial investment.
While dividend-paying tokens generally require less technical knowledge compared to other crypto passive income methods on this list, you’ll need to possess the ability to critically evaluate crypto projects, as the majority of the risk lies in the project’s viability and long-term success.
In our assessment, dividend-paying tokens may not always be the most efficient way to generate passive income, as their returns are heavily contingent on the success and stability of the associated project.
Factors Influencing Returns:
- Project Profitability: The overall success and profitability of the underlying project are paramount.
- Dividend Policy: The project’s policy regarding the frequency and amount of dividend distributions.
- Token Price: Fluctuations in the market price of the token can affect the real value of your dividends.
- Demand: Higher demand for the token might lead to an increased token value and potentially higher dividends.
- Regulatory Changes: Changes in regulations can affect the project’s operations and its ability to pay dividends.
- Adoption & Growth: The rate of adoption and growth of the project’s user base can enhance its profitability and dividend potential.
How to Get Started:
- Research Dividend Tokens: Identify tokens that explicitly offer dividends, such as KuCoin Shares (KCS), NEO (GAS), or VeChain (VTHO). Thoroughly evaluate the project, its tokenomics, dividend policies, and market performance.
- Purchase and Transfer: Acquire the tokens and transfer them to your personal, secure crypto wallet.
- Qualify for Dividends: Some tokens may require specific actions, like staking them or holding them in a particular manner, to qualify for dividends. Follow the project’s guidelines.
- Monitor Earnings: Regularly check your wallet or the project’s platform to track your dividend earnings and ensure timely payouts.
- Stay Informed: Keep abreast of news and updates concerning the projects you’ve invested in. This helps you stay aware of any changes in dividend policies or project developments.
- Claim Dividends: Some projects may necessitate manual claiming of dividends. Follow the project’s procedures to claim and either reinvest or utilise your earnings.
UK Tax Implications for Dividend-Paying Tokens: Dividends received from crypto tokens are generally treated as Income Taxable at their GBP value when they are paid to you. The underlying token itself is a Capital Gains Tax asset, so any profit or loss when you sell it will be subject to CGT.
7. Cloud Mining
Cloud mining allows you to participate in cryptocurrency mining without the need to purchase, configure, or maintain specialised hardware. This offers the potential for a steady passive crypto income with a reduced upfront physical investment. By renting mining power (hash rate) from a service provider, you can mine cryptocurrencies remotely, making it a more accessible option for individuals who lack the technical expertise or resources to establish their own mining rig.
However, cloud mining carries significant risks, notably the high potential for scams and engagement with unreliable providers. Profitability is often lower compared to directly owning and operating mining hardware due to substantial service fees and reduced mining rewards, which can significantly erode potential earnings. Many contracts require a large upfront payment for a fixed term, and if market conditions change unfavourably, you could end up losing money.
The efficiency of cloud mining is generally low to moderate, heavily dependent on current mining conditions, the cryptocurrency’s price, and critically, the trustworthiness and reliability of the chosen service provider. We strongly advise meticulous investigation of providers and a thorough calculation of the potential profitability of the mined token versus the total cost of the cloud mining contract.
Factors Influencing Returns:
- Cryptocurrency Value: The market value of the mined cryptocurrency directly influences profitability.
- Mining Difficulty: Increased network mining difficulty can reduce the number of coins mined, impacting rewards.
- Hash Rate Purchased: The amount of mining power rented from the cloud mining service; higher hash rates can lead to more coins mined.
- Provider Fees: Fees charged by the cloud mining provider will directly reduce your net rewards.
- Contract Terms: The length and conditions of the cloud mining contract significantly influence overall returns and potential for loss.
- Electricity Costs: While typically borne by the provider, high electricity costs for the provider can impact their pricing and your profitability.
- Halving Events: Changes in block rewards, such as halving events (where mining rewards are cut), significantly impact the number of coins earned.
- Provider Reliability: The reputation and reliability of the cloud mining service provider are paramount, as many historical examples of fraud exist.
How to Get Started:
- Research Reputable Providers: Diligently search for reputable cloud mining companies with verifiable positive reviews and a proven track record of reliability. Be exceptionally cautious of unrealistic promises.
- Compare Plans: Compare the mining plans and contracts offered by different providers. Consider factors such as hash rate, contract duration, fees, and the specific cryptocurrencies supported.
- Register and Select Plan: Register an account with your chosen cloud mining provider and select a mining plan that fits your budget and goals.
- Track Progress: Monitor your mining progress using the provider’s dashboards.
- Withdraw Mined Crypto: Periodically withdraw your mined cryptocurrency to your secure digital wallet.
UK Tax Implications for Cloud Mining: Earnings from cloud mining are typically treated as Income Taxable in the UK, based on the GBP value of the cryptocurrency mined at the time of receipt. Any subsequent sale of these mined tokens would then be subject to Capital Gains Tax. Due diligence on the provider is key not just for fraud prevention, but for accurate tax reporting.
8. NFT Royalties
NFT royalties offer a continuous income stream from the secondary sales of Non-Fungible Tokens (NFTs). For artists and creators, this means earning a pre-set percentage of the sale price whenever their NFT is sold or resold on a marketplace, generating an ongoing income stream. This passive income method is achieved simply by the creator setting a royalty percentage during the initial minting process.
However, this method is highly speculative and heavily reliant on the enduring popularity and demand for the specific NFT. The broader NFT market has demonstrated extreme volatility and illiquidity, experiencing a significant decline in prices and overall interest since its peak boom in 2021/2022. As a consequence, the likelihood of consistently earning from NFT royalties is highly variable, being profoundly influenced by prevailing market conditions and ongoing resale activity.
Nevertheless, we believe NFT royalties present a unique and innovative opportunity for creators to monetise their digital work over an extended period. If you are a creator willing to navigate the inherent uncertainties and risks, NFT royalties could be a lucrative way to generate passive income while contributing to and participating in the evolving digital art and collectibles space.
Factors Influencing Returns:
- Creator Reputation: Well-known creators with a strong following tend to generate higher demand and more sales, leading to increased royalty income.
- Market Trends: Broader trends within the NFT market, including interest in particular types of art or collectibles, significantly impact sales.
- Royalty Percentage: The percentage of royalties set by the creator directly affects the income earned from each resale, and can also influence a buyer’s willingness to resell.
- Marketplace Support: Different NFT marketplaces have varying policies and levels of support for royalty payments.
- NFT Quality/Uniqueness: Unique and high-quality NFTs are more likely to be resold at higher values, thereby increasing potential royalty income.
How to Get Started:
- Develop Unique Digital Content: Create original digital content suitable for minting as NFTs, such as digital art, music, videos, or other creative works.
- Select a Blockchain Platform: Choose a blockchain platform that supports NFTs, such as Ethereum, Binance Smart Chain, or Flow. Each platform has its own benefits, costs, and audience.
- Choose an NFT Marketplace: Select an NFT marketplace to mint and sell your NFTs. Popular options include OpenSea, Rarible, Mintable, and Foundation.
- Mint NFT and Set Royalties: Use the marketplace’s tools to mint your digital content into an NFT. Crucially, during this process, specify the royalty percentage you wish to earn from all future secondary sales.
- List NFT: List your NFT on the chosen marketplace. Set a competitive price and provide a detailed description to attract potential buyers.
- Track Royalties: Regularly check the marketplace and your connected wallet to track sales and royalty payments. Most platforms automatically credit royalties to your wallet when your NFT is resold.
UK Tax Implications for NFT Royalties: Royalties earned from NFTs are generally considered Income Taxable in the UK, usually as business or miscellaneous income, depending on the scale and nature of your creative activities. If you are regularly creating and selling NFTs, this could be treated as a trading activity subject to Income Tax and potentially National Insurance. The original sale of the NFT and any subsequent resale by you (if you were to re-acquire and sell) would also be subject to Capital Gains Tax if a profit is made. Record-keeping is especially complex here due to the varying nature of NFT transactions.
9. Crypto Savings Accounts
Much like traditional bank savings accounts, crypto savings accounts offer a straightforward and user-friendly method to passively grow your digital assets. These accounts typically provide consistent and reliable returns, making them an attractive option for those seeking the simplest way to generate passive income from their cryptocurrency holdings.
One of the main advantages is the predictability of interest earnings, which can aid in financial planning. However, it’s important to note that the interest rates offered by crypto savings accounts are often lower compared to the other, more complex crypto investment methods outlined in this guide. Crucially, there is always a risk of platform insolvency or hacking, which could jeopardise your invested assets.
Important Note for UK Investors: Unlike traditional bank accounts which are covered by the Financial Services Compensation Scheme (FSCS) up to £85,000, crypto savings accounts are generally not insured by the FSCS. This means that if the platform fails or is hacked, you could lose all of your deposited cryptocurrency. This is a significant risk that must be fully understood before utilising such services.
Despite these risks, crypto savings accounts remain a simple entry point for earning passive income, offering a transparent and predictable return structure for those prioritising ease of use and consistent, albeit potentially lower, yields.
Factors Influencing Returns:
- Interest Rates: Interest rates offered by the platform can vary significantly between different providers and for different tokens.
- Platform Fees: Fees charged by the platform for services can reduce your net returns.
- Deposit Size: Larger deposits may sometimes qualify for higher interest rates.
- Lock-up Periods: Longer lock-up periods can occasionally offer higher interest rates, but will reduce the liquidity of your funds.
- Borrowing Demand: Higher demand for borrowing specific cryptocurrencies usually leads to better interest rates for savers.
- Promotional Rates: Some platforms offer promotional interest rates for new users or specific cryptocurrencies, which can affect short-term returns.
How to Get Started:
- Choose a Provider: Carefully select a crypto savings account provider. Examples include some features offered by regulated exchanges like Coinbase or Kraken, or dedicated lending platforms like Nexo. Review their interest rates, fees, and critically, their security measures and transparency regarding how funds are used and protected (or not).
- Sign Up and Verify: Register for an account on your chosen platform. Complete any necessary verification processes, such as KYC (Know Your Customer) requirements.
- Select Terms: Choose the savings terms that align with your needs. Some platforms offer flexible accounts with variable interest rates, while others have fixed terms with potentially higher rates.
- Deposit Cryptocurrencies: Deposit your cryptocurrencies into the savings account, following the platform’s instructions to ensure a smooth transaction.
- Monitor and Manage: Periodically withdraw your earned interest or reinvest it back into the savings account to potentially compound your returns.
UK Tax Implications for Crypto Savings Accounts: Interest earned from crypto savings accounts is typically treated as Income Taxable in the UK, similar to traditional bank interest. The personal savings allowance might apply here. However, any subsequent disposal of the initial cryptocurrency deposit would be subject to Capital Gains Tax.