UK to Implement Cryptocurrency Regulations by 2024
The future of cryptocurrencies and blockchain in the UK looks promising, with ongoing interest from the government and users. Cryptocurrencies, known as “Exchange Tokens,” are not banned in the UK and are intended for use as a mode of payment. However, they are regulated for money laundering purposes.
Cryptocurrency exchanges in the UK are generally required to register with the Financial Conduct Authority (FCA). Entities involved in crypto-related activities that fall under existing financial regulations for derivatives require authorization.
Investors in cryptocurrencies have access to the Financial Ombudsman Service and the Financial Services Compensation Scheme in case of any disputes. The FCA recognizes the potential and risks of trading cryptocurrencies.
In terms of regulations, there have been several events and announcements in the UK crypto industry. Here is a timeline of some significant developments:
– March 28, 2022: The UK government plans to create a regulatory framework for cryptocurrency businesses, with a focus on stablecoins.
– March 15, 2022: The UK crime agency calls for tougher regulations on cryptocurrencies that facilitate money laundering and disguise transactions.
– February 5, 2022: The UK government updates tax rules for decentralized finance and staking.
In the UK, crypto-assets are taxed differently depending on the scenario. Capital Gains Tax applies when individuals use crypto-assets for personal purchases. Income Tax and National Insurance contributions are applicable when individuals receive crypto-assets from their employers as payment. Taxes on cryptocurrency mining depend on factors such as activity, organization, risk, and commerciality.
Cryptocurrency mining is allowed in the UK without specific regulations, but taxes are applied when cryptocurrencies are awarded through mining.
In terms of historic events and announcements, there have been various developments in the UK crypto industry:
– In 2021, the UK introduced a digital service tax on cryptocurrency exchanges.
– In 2020, the UK banned the sale of crypto derivatives and lifted a ban on Wirecard UK’s payment activities.
– In 2019, the UK proposed a ban on cryptocurrencies, auctioned seized cryptocurrencies, and dissolved several crypto companies due to low growth.
– In 2018, the UK parliament issued a report recommending regulation of the crypto-asset market.
– In 2017, the UK and other EU governments planned to bring cryptocurrencies under anti-money laundering and counter-terrorism financial legislation.
– In 2016, the Royal Mint partnered with the CME group to launch a digitalized gold offering, and the Bank of England announced plans to launch its own cryptocurrency.
– In 2015, the HM treasury published a report on the risks and benefits of cryptocurrencies.
– In 2013, HMRC confirmed that digital currencies are covered by the UK tax system.
Overall, the UK has a relatively lenient regulatory environment for cryptocurrencies, but scams and risks still exist. It is important for crypto enthusiasts to stay updated on the latest regulatory news and announcements.