Regulations for Cryptocurrency in the United Kingdom in 2024
The future of cryptocurrencies and blockchain in the UK looks promising, as there is ongoing interest from the government and users. Cryptocurrencies, known as “Exchange Tokens” in the UK, are not banned and do not have specific regulations. 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 need authorization. The government also allows access to the Financial Ombudsman Service and the Financial Services Compensation Scheme in case of disputes related to cryptocurrency purchases.
The FCA recognizes the potential and risks of trading cryptocurrencies. So, what’s happening with UK cryptocurrency regulations? Let’s take a look at a timeline of events and announcements in the crypto industry.
In 2022, the UK government is focusing on regulating cryptocurrency businesses, particularly stablecoins. The Finance Minister is expected to announce a new regulatory regime for crypto in the coming weeks.
In March 2022, the UK Crime Agency called for tougher crypto regulations to combat money laundering facilitated by crypto mixers on the dark web.
In February 2022, the UK government updated tax rules for decentralized finance and staking, providing guidance on determining the nature of returns.
In terms of taxation, crypto-assets in the UK are taxed under different scenarios and taxes. Personal purchases with crypto-assets are taxed under Capital Gains Tax, while income from receiving crypto-assets as payment from an employer is taxed under Income Tax and National Insurance. Mining cryptocurrencies also incurs taxation based on factors like activity, organization, risk, and commerciality.
Cryptocurrency mining is allowed in the UK without specific regulations, and taxes are only applied when cryptocurrencies are awarded through mining.
In past years, there have been various events and announcements related to crypto in the UK. These include the introduction of a digital service tax on crypto exchanges, the launch of a crypto brokerage and exchange platform, and discussions on regulating the crypto-asset market.
Overall, the UK has a relatively open marketplace for cryptocurrencies, but scams and fraudulent activities do occur. It is important for crypto enthusiasts to stay updated on the latest regulatory news and announcements.