To create a crypto wallet, pick one of three types: a hosted wallet that comes with an exchange account, a self-custody app on your phone, or a hardware device. For the last two, write the recovery phrase down offline. In the UK, your first withdrawal from an exchange to that wallet may trigger an ownership check.
This is an evergreen how-to. This desk read the FCA’s Travel Rule statement, the FCA’s crypto basics page and the Joint Money Laundering Steering Group’s Travel Rule guidance on 30 October 2026. It names no wallet: we checked no wallet provider’s register entry, and choosing one is your call.
How to create a crypto wallet: the three types
| Type | Who holds the keys | If you lose access |
|---|---|---|
| Hosted wallet | The exchange | The exchange’s account recovery |
| Self-custody app | You, on your phone or computer | Your recovery phrase, or nothing |
| Hardware wallet | You, on a separate device | Your recovery phrase, or nothing |
A hosted wallet
An exchange account already includes one. The exchange holds the keys and you log in to see a balance. That makes its standing with the regulator the question that matters; our guide to what happens if your exchange isn’t FCA authorised explains the states a firm can be in, and our Coinbase piece shows how to read one firm’s record.
How to create a self-custody crypto wallet
- Install the app from its publisher’s official listing. Check the developer name first.
- Choose to create a new wallet, not to import one.
- Write the recovery phrase on paper, in order. Do not photograph it, store it in a notes app or type it into a website. Anyone who has it controls the wallet, and nobody legitimate will ask for it.
- Confirm the phrase when the app tests you, then set a PIN.
- Copy your receive address and send a small amount first.
How to set up a hardware wallet
Buy the device from its maker or a seller the maker names. During set-up the device should generate the recovery phrase on its own screen; treat one that arrives with a phrase already printed for you as compromised. Back the phrase up on paper, install the maker’s companion app, and test with a small transfer.
The UK step: withdrawing to your new wallet
The FCA’s Travel Rule statement (first published 17 August 2023, last updated 6 February 2026) says that from 1 September 2023 UK cryptoasset businesses must collect, verify and share information about cryptoasset transfers. Government legislated the change in July 2022, in Part 7A of the Money Laundering Regulations 2017.
The FCA statement read by this desk does not use the term unhosted wallet. The detail on wallets like yours sits in the JMLSG’s Annex 22-I guidance, which is Board-approved industry guidance from August 2023, not FCA rules. It says:
- a transfer to an unhosted wallet is in scope, including Lightning and other Layer-2 transfers;
- firms take a risk-based approach and take reasonable steps to obtain information from their own customer;
- in higher-risk cases a firm should consider authorising the transfer only if your control of the wallet can be reasonably established, for example by a micro deposit or a cryptographic signature;
- where requested information is not provided, the firm must not make the transfer.
In practice, expect to be asked whether the wallet is yours, and possibly to sign a message in it. Not every withdrawal triggers it; the guidance is risk-based.
Questions readers ask
How do I create my own crypto wallet?
Install a self-custody wallet app from its publisher’s official listing, or set up a hardware device, and choose to create a new wallet. Write the recovery phrase on paper, in order, and confirm it when asked. Then send a small test amount from your exchange. In the UK, that first withdrawal may prompt the exchange to ask whether the wallet is yours.
Is it free to create a crypto wallet?
A hosted wallet comes with an exchange account. This desk checked no wallet app’s price, so read the listing before you install, and a hardware wallet is a device you buy. Moving crypto in or out can carry fees set by the exchange or the network, so check them before you send.
Do I need a crypto wallet to buy crypto?
Not a separate one. When you buy on an exchange, it holds the crypto for you in a hosted wallet tied to your account, and you can sell from there. You need your own self-custody or hardware wallet only if you want to hold the keys yourself. That brings full control and full responsibility, with no one to call if the recovery phrase is lost.
The risk is yours
The FCA’s crypto basics page says crypto is largely unregulated in the UK, so Financial Services Compensation Scheme cover is highly unlikely, and that you should be prepared to lose all your money. In self-custody there is no firm holding your crypto to complain to. When you later sell, the tax step is in our guide to transferring bitcoin to a bank account. Nothing here is financial advice.