What is Arbitrum
Arbitrum is a layer-2 scaling solution for Ethereum based on "Optimistic Rollup" technology, which processes transactions off the main chain before recording them on Ethereum in aggregated form, cutting costs and time.
The ARB token, distributed in 2023 via a large airdrop to the network's historical users, is used mainly for protocol governance via the Arbitrum DAO, not to pay transaction fees (which remain in ETH).
Frequently asked questions
Is Arbitrum regulated in the UK?
The UK has its own evolving regime for cryptoasset regulation, separate from the EU's MiCA framework. Crypto exchanges and custodians must register with the FCA for anti-money laundering purposes, but this doesn't equate to the investor protections that regulated financial instruments like ETFs and shares carry.
What's the difference between buying Arbitrum on an exchange versus via an ETP?
On an exchange you hold the keys directly (or the exchange custodies them for you); an ETP (Exchange Traded Product) is instead a listed financial instrument that tracks the price, purchasable through the same broker account you'd use for ETFs and shares.
How is Arbitrum taxed in the UK?
Gains from cryptocurrencies in the UK are generally subject to Capital Gains Tax, with specific rules that differ from those for ETFs and shares held in an ISA — this is an evolving area, so check the latest HMRC guidance or speak to a tax adviser for your situation.
