Cryptocurrency in the Investment Landscape
Cryptocurrency — digital assets secured by cryptographic protocols and operating on distributed ledger (blockchain) technology — has moved from the fringes of finance to a mainstream conversation point over the past decade. Bitcoin, the first and largest cryptocurrency by market capitalisation, has reached multi-trillion dollar valuations at peak, and a significant ecosystem of alternative cryptocurrencies (Ethereum, Solana, and thousands of others) has developed around it.
For internationally mobile investors, cryptocurrency presents both opportunities and complications. The investment case rests on potential for appreciation and portfolio diversification; the complications include extreme volatility, custody risk, regulatory uncertainty, and highly jurisdiction-dependent tax treatment.
This guide treats cryptocurrency as a speculative alternative asset — acknowledging its growing institutional acceptance while maintaining honest assessment of its risk characteristics and limitations.
Bitcoin and Ethereum: The Two Principal Assets
Bitcoin (BTC): Created in 2009 by the pseudonymous Satoshi Nakamoto. Bitcoin is a decentralised digital currency with a fixed supply cap of 21 million coins. It operates without central control — no government, central bank, or single organisation can create additional Bitcoin or reverse transactions. The fixed supply and increasing difficulty of mining (the computational process creating new Bitcoin) are central to the argument that Bitcoin is a store of value analogous to gold: scarce, portable, and immune from monetary debasement. Bitcoin's price history has been characterised by extraordinary gains interspersed with devastating drawdowns (80%+ declines were recorded in 2011, 2014, 2018, and 2022).
Ethereum (ETH): A programmable blockchain platform supporting "smart contracts" — self-executing code running on the Ethereum network. Smart contracts enable decentralised applications (DeFi — decentralised finance — and NFTs among others). Ethereum transitioned from proof-of-work to proof-of-stake consensus in September 2022 ("The Merge"), significantly reducing its energy consumption. Ethereum is more complex than Bitcoin and its value is driven by the utility and demand for its blockchain platform rather than purely by monetary supply arguments.
Other cryptocurrencies ("altcoins"): Thousands of other cryptocurrencies exist, most of which have no long-term track record and are highly speculative. For investors seeking measured crypto exposure, Bitcoin and Ethereum together represent the most established assets with the longest histories. Smaller altcoins carry substantially higher risk of total loss.
Crypto ETFs and ETPs: Regulated Access
The approval of US Bitcoin spot ETFs in January 2024 (including products from BlackRock, Fidelity, and Invesco) was a landmark in cryptocurrency's integration with mainstream financial markets. Within months of approval, Bitcoin ETFs attracted tens of billions of dollars in assets.
In Europe, Bitcoin and Ethereum ETPs have been listed on major exchanges since 2019–2020, preceding US spot ETF approval. Key European providers include:
- 21Shares: Swiss-based, offers Bitcoin, Ethereum, and multi-asset crypto ETPs.
- ETC Group: Offers Bitcoin ETPs listed on Xetra (Germany), London Stock Exchange, and others.
- WisdomTree: Offers physically backed Bitcoin and Ethereum ETPs listed on European exchanges.
- Invesco: Offers a Bitcoin ETP on European exchanges.
These products hold physical Bitcoin or Ethereum in custody (not derivatives) and are structured as debt securities secured by the underlying asset. Custody is typically with regulated custodians (Coinbase Custody, Komainu, BitGo). TERs are typically 1.0–2.0% per annum — higher than equity ETFs, reflecting the cost and complexity of crypto custody.
For international investors, accessing crypto through a regulated ETP eliminates the need to manage wallets and private keys, provides standard brokerage account reporting, and ensures the asset is held by a regulated entity. The trade-off is the ongoing fee cost and the fact that you cannot "withdraw" your crypto from the ETP to a personal wallet.
Self-Custody vs Exchange Custody
For investors choosing to hold cryptocurrency directly rather than through ETPs:
Exchange custody: Holding crypto in an account on an exchange (Coinbase, Kraken, Binance, and others). Convenient and liquid, but exposes the investor to exchange-level counterparty risk. The FTX collapse in November 2022 — one of the world's largest exchanges, which misappropriated approximately USD 8 billion in client funds — is the most stark illustration of this risk. Other major exchange failures have occurred (Mt. Gox 2014, QuadrigaCX 2019). For meaningful holdings, relying on exchange custody alone is not recommended.
Self-custody (hardware wallet): Using a hardware wallet (Ledger, Trezor) to hold private keys offline. The investor controls the private keys and therefore the funds — no exchange counterparty risk. The risks shift to: physical loss or damage of the device (mitigated by seed phrase backup), loss or theft of the seed phrase itself (a sequence of 12–24 words that can restore the wallet), and human error (sending to the wrong address, losing the seed phrase). Self-custody requires careful security practices and cannot be recovered by any third party if the seed phrase is lost.
Regulated custodians: Institutions such as Coinbase Custody (a separate entity from the exchange), Anchorage Digital, and BitGo offer institutional-grade custody with segregated accounts and regulatory oversight. These are typically accessible to larger investors or through managed accounts.
Tax Treatment Across Key Jurisdictions
Cryptocurrency tax treatment varies significantly by jurisdiction, and rules are evolving:
United Arab Emirates: No personal income tax or CGT as of 2026. Crypto gains for UAE-resident individuals are generally not taxed. The UAE has been actively developing a crypto regulatory framework through VARA (Dubai) and ADGM/FSRA (Abu Dhabi).
Cyprus: Cyprus has no specific cryptocurrency tax legislation as of 2026. Gains from cryptocurrency disposals are generally treated as capital gains, and Cyprus does not levy CGT on the disposal of securities and financial assets (other than immovable property in Cyprus). However, if crypto trading is deemed a business activity, profits could be subject to corporation tax (12.5%) if held through a company, or income tax if trading as an individual. Professional advice is essential; the position is not settled.
United Kingdom (for non-residents): UK non-residents are generally not subject to UK CGT on cryptocurrency disposed of while non-resident, as crypto is treated as a capital asset not connected to UK land. However, temporary non-residence rules apply: individuals returning to UK residency within 5 years of departure can have overseas gains (including crypto) brought back into UK tax in the year of return. UK residents are subject to CGT on crypto gains above the annual exemption (currently £3,000) at 18% for gains within the basic-rate band and 24% above it (the rates that have applied since 30 October 2024).
Spain: Spain taxes cryptocurrency gains as savings income at progressive rates of 19–28% depending on the gain amount (as of 2026). Spain also has a wealth tax threshold; significant crypto holdings may be reportable.
Thailand: Foreign-sourced income (including crypto gains) that is not remitted to Thailand in the year it arises has historically not been taxable under the "same year remittance" rule. Rule changes effective from 2024 expand the scope of foreign-sourced income taxable in Thailand; professional local advice is required.
Volatility and Portfolio Sizing
Cryptocurrency's volatility is orders of magnitude greater than equities or bonds. Bitcoin has experienced drawdowns of 50–83% from peak to trough on multiple occasions. Ethereum's volatility is higher still. A 5% allocation to Bitcoin falling 75% reduces the portfolio by 3.75 percentage points — painful but survivable. A 20% allocation experiencing the same drawdown reduces the portfolio by 15 percentage points.
The volatility also means that even modest allocations to Bitcoin can, in good years, contribute disproportionately to portfolio returns — Bitcoin rose over 150% in 2023 and made further gains in 2024. The asymmetric nature of the return distribution (large potential gains; potential total loss) is more analogous to a venture capital allocation than a conventional asset class.
For investors choosing to include cryptocurrency, managing position size to be consistent with the ability to tolerate total loss of the allocation is a practical discipline. Crypto is still a developing asset class with uncertain regulatory outcomes; position sizing should reflect this uncertainty.
This guide is for general information only and does not constitute regulated investment advice. Cryptocurrency is a highly speculative asset class. The value of cryptocurrency investments can fall to zero. Regulatory and tax frameworks for cryptocurrency are evolving and may change significantly. Past performance is not a guide to future returns. Tax treatment depends on individual circumstances and the laws of multiple jurisdictions. Always seek independent regulated advice before investing in cryptocurrency.
How Global Investments can help
Global Investments helps internationally mobile clients think clearly about cryptocurrency as a portfolio component — appropriate sizing, access structures, custody options, and the relevant tax position in their jurisdiction. We provide honest, evidence-based guidance rather than promotional optimism. If you are considering adding digital assets to your portfolio, contact us to discuss the specifics of your situation.
Frequently Asked Questions
Is cryptocurrency taxed in the UAE?
As of 2026, the UAE levies no personal income tax or capital gains tax on individuals. Gains from cryptocurrency disposals by UAE-resident individuals are therefore generally not subject to tax at the individual level. Corporate entities involved in crypto trading may have UAE corporate tax considerations. The UAE has also established VARA (Virtual Assets Regulatory Authority) in Dubai to regulate virtual asset service providers, and crypto businesses operating in the UAE require appropriate licensing. Tax and regulatory positions can change — professional advice for specific situations is recommended.
How are crypto gains taxed for UK non-residents?
UK non-residents are generally not subject to UK capital gains tax on the disposal of cryptocurrency, as CGT applies to UK-resident individuals (and non-residents on certain UK assets, primarily UK land and listed UK property companies). A non-resident returning to UK residency should be aware of the temporary non-residence rules, which can bring gains made while non-resident back into UK tax if the individual returns within 5 years. Note that the remittance basis and non-dom regime were abolished from 6 April 2025 and replaced by a residence-based 4-year Foreign Income and Gains regime for new arrivers; recent arrivals should seek specific advice on how their overseas crypto gains are treated.
Is it safe to hold cryptocurrency on an exchange?
Exchange custody carries counterparty risk — if the exchange fails, is hacked, or misappropriates client assets, investors may lose their holdings. The collapse of FTX in November 2022 (one of the world's largest crypto exchanges at the time, with approximately $8bn of customer funds lost or misappropriated) is the most prominent example. For meaningful crypto holdings, self-custody using a hardware wallet — where you hold your own private keys — eliminates exchange counterparty risk but introduces its own risks: loss of the device, loss of the seed phrase, and physical theft.
What is a crypto ETF or ETP and how is it different from holding crypto directly?
Crypto ETFs and ETPs (Exchange-Traded Products) hold cryptocurrency directly or through derivatives and allow investors to gain exposure through standard brokerage accounts without managing wallets or private keys. Bitcoin ETPs are available on European exchanges (e.g., 21Shares, ETC Group). In the US, the SEC approved Bitcoin spot ETFs in January 2024, opening access to a much larger investor base. Crypto ETPs charge an annual fee (TER of 1–2%), don't provide the 24/7 trading of direct crypto, and may be subject to standard investment account settlement times — but are significantly simpler and custody risk is borne by the ETP provider.
What proportion of a portfolio should be in cryptocurrency?
There is no consensus on appropriate cryptocurrency allocation, but for investors choosing to include it, a modest allocation — typically 1–5% of total investable assets — is the range most frequently cited by institutional commentators. This allows meaningful participation in potential appreciation while limiting the portfolio impact of cryptocurrency's extreme volatility (drawdowns of 50–80% have occurred multiple times). Larger allocations are speculative and should only be considered by investors who genuinely understand the asset and can tolerate the volatility.
This guide is for general information only and does not constitute financial advice or a personal recommendation. The value of investments can fall as well as rise and you may get back less than you invest. Past performance is not a guide to future returns. Tax rules, investment regulations, and the availability of specific investment vehicles change — always verify current rules and seek advice from a qualified independent financial adviser before making any investment decisions.