If you are buying a property, moving a large sum into a bank account or investing through a regulated firm, and the money began as cryptocurrency, you will be asked to evidence your source of funds. A screenshot of an exchange balance will not do it. This guide explains what the person reviewing your file is trying to establish, and how to give it to them in a form they can accept.
Why you are being asked
Solicitors, banks, accountants and estate agents in the UK are regulated under the Money Laundering Regulations. They must understand where a client's money came from before they handle it, and they must be able to show a regulator that they checked. For salaried income that means payslips and bank statements. For crypto, the bank statement only shows the last step: a payment arriving from an exchange. It says nothing about how the value was built.
The reviewer is usually not a blockchain specialist. They are trying to answer three plain questions:
- Where did the original money come from? Normally your own bank account, paid into an exchange.
- How did it become the amount in front of me? Price growth, trading, staking, airdrops, mining, or money from someone else.
- Is there anything in the history I should worry about? Unexplained third-party money, sanctioned addresses, mixers.
Everything you provide should help answer one of those.
What good evidence looks like
A complete pack follows the money from start to finish without a gap:
- Fiat in. Bank statements showing payments to an exchange, matched to the exchange's own deposit records.
- Purchases. Exchange records showing what was bought, when and for how much.
- Movement to your own wallets. Withdrawals from the exchange to addresses you control, each visible on the blockchain.
- What happened while you held it. The on-chain history of those wallets: holdings over time, trades, staking rewards, anything received from elsewhere.
- The way back. Transfers from your wallets to the exchange, the sale into pounds, and the withdrawal to your bank account.
The strength of crypto evidence is that steps 3 to 5 are on a public ledger. Anyone can check them, at any time, and they cannot be edited. The weakness is that raw blockchain data is unreadable to most people. The job of a source-of-funds report is to turn that history into a short document with a clear conclusion, a timeline, and references a sceptical reader can verify.
The chart that does most of the work
The single most useful exhibit is a chart of portfolio value over time against cumulative money deposited. If you deposited £60,000 between 2017 and 2021 and the portfolio is worth £440,000 today, the chart shows at a glance that the gap is price appreciation on assets you already held, not new money arriving from an unknown source. That is the point most reviewers need to be comfortable with.
Reconciliation: the step people skip
Reviewers gain confidence when two independent records agree. Every crypto deposit and withdrawal on your exchange statements should be matched to the corresponding blockchain transaction by hash, amount and time. A line such as "46 of 48 entries matched; the remaining two are explained below" is far more persuasive than a general assurance.
Do not hide the awkward items. An unmatched withdrawal from 2018 to a wallet you no longer have, or 0.4 ETH a friend repaid you in 2021, is normal. Listing it with an explanation builds trust. A reviewer finding it themselves does the opposite.
Common reasons for delay
- Only a tax report is supplied. Tax software shows gains and losses. It does not show provenance, and many firms will not accept it on its own.
- Missing exchange history. Exchanges close, and old accounts get forgotten. Download full statements from every exchange you have used as early as you can.
- Wallets not declared. If funds moved through a wallet you did not mention, the trail has a hole in it. List every address, including old ones.
- Third-party inflows. Money received from other people is the thing reviewers care about most. Each one needs a sentence of explanation and, ideally, a document.
- Privacy tools. Funds that passed through a mixer are very hard to evidence. Expect questions.
- Leaving it late. Assemble the pack before you make an offer, not the week before exchange of contracts.
Proving the wallets are yours
A careful reviewer may ask how they know you control the wallets in the report. There are two simple ways: signing a message with the wallet's key, or sending a small, pre-agreed amount from it. Either takes minutes and removes a whole category of doubt.
What a report cannot do
A source-of-funds report sets out what the evidence shows. It is not legal or tax advice, and the decision to accept it always rests with the firm asking. Trading that happened inside an exchange can only be evidenced from that exchange's statements, because it never touches the blockchain. Regulated firms may also run their own screening alongside it. Ask your solicitor or bank what they need before you commission anything, and share that with whoever prepares the report.