# What crypto is NOT protected — FSCS, FOS and exchange risk

Crypto on exchanges is not covered by FSCS (up to £85,000 bank protection) or the Financial Ombudsman Service for most activities. If an exchange fails, you may lose everything — as customers of Celsius and FTX experienced. FCA registration is mainly anti-money laundering compliance, not deposit insurance.

## Key facts
- FSCS protects eligible bank deposits — not crypto holdings.
- FCA MLR registration ≠ compensation if the firm fails.
- Platform insolvency can freeze withdrawals for months or permanently.
- Self-custody shifts risk to you — lost seed phrase means lost crypto.
- Only invest what you can afford to lose entirely.

## FSCS and crypto

The Financial Services Compensation Scheme protects qualifying deposits with UK authorised banks up to £85,000 per person per licence. Crypto held on an exchange is not a bank deposit and is not FSCS-protected.
## Financial Ombudsman Service

FOS resolves complaints about regulated financial services. Most crypto activities are not fully regulated today, so you often cannot complain to FOS about crypto investment losses. The 2027 regime may expand protections for some activities.
## When exchanges fail

Customers may become unsecured creditors in insolvency — last in line for any remaining assets. Recovery can take years with partial or zero return. The FCA warns you should be prepared to lose all the money you invest.
## How to reduce (not eliminate) risk

Use FCA-registered firms, enable two-factor authentication, withdraw long-term holdings to self-custody you control, and never invest more than you can lose. See our storage and scam guides.

## FAQs
### Are stablecoins protected?

No special FSCS protection. Stablecoin failures (such as TerraUSD) showed pegs can break.

## Sources

- [FCA — Cryptoassets for consumers](https://www.fca.org.uk/consumers/cryptoassets)
- [FSCS — What we cover](https://www.fscs.org.uk/what-we-cover/)
- [Bank of England — Cryptoassets](https://www.bankofengland.co.uk/knowledgebank/will-cryptoassets-be-the-future-of-finance)

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— Digital Assets UK (https://digital-assets.co.uk/regulation/crypto-not-protected-fscs/), reviewed 2026-06-23. Source: https://www.fca.org.uk/consumers/cryptoassets