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Crypto and UK – What is the Current Position of Cryptocurrencies in the UK | Business

The rise of blockchain and cryptocurrencies is becoming noticeable in today’s increasingly digitized environment. Although bitcoin is well known internationally, the legal status of digital currencies varies widely from country to country. Whether or not cryptocurrency is legal in the UK is discussed, along with related topics.

Where is the UK on cryptocurrencies?

While a few countries, like China, have banned cryptocurrencies, they are perfectly legal in the UK. To protect its citizens from financial harm, the UK government uses a regulatory strategy that involves setting standards and educating the public about potential dangers.

Despite the inclusion of the word “currency” in the name “cryptocurrency”, it is not necessarily recognized as such in the UK. HMRC does not recognize cryptocurrencies like sterling or any other fiat currency as legal tender, instead classifying them as digital assets or “crypto assets” which are subject to capital gains or tax income, as the case may be.

Cryptocurrency exchanges

Cryptocurrency trading is allowed in the UK, but only if certain conditions are met. Bitcoin 360 AI is a great place to start if you are looking for UK based trading platforms. Previously, the UK had enacted its version of the bitcoin regulatory provisions of the 5th and 6th AML Directives. Since the beginning of 2021, under these rules, all companies in the UK dealing in crypto assets must register with the Financial Conduct Authority (FCA) if they meet one of the following criteria:

  • Establish a position in the UK market.
  • Help customers who live in the UK.
  • AML/CFT compliance and consumer protection obligations, in addition to risk management systems, must be followed by these organisations.

The FCA reminds businesses that they must also follow the Financial Fraud, Terrorist Financing and Movement of Funds Regulations 2017. To protect investors and traders from the risks associated with crypto-economic uncertainty, the FCA banned trading digital currency futures in January 2021.

The best way to trade cryptocurrency legally is in the UK.

It has been clearly stated that obtaining registration permission from the FCA is necessary for any type of cryptocurrency exchange to take place. You must complete the following tasks before submitting your registration for the cryptocurrency exchange license:

  • Create a corporation or other type of legal entity.
  • Maintain a physical location that serves as your headquarters.
  • Put your name on the tax rolls.
  • Deposit into an existing account.

If you don’t know anything about it, it’s worth considering whether or not you need a trustworthy partner or consultant to help you out. Go through the following steps to register your crypto exchange license:

  • Log on to the FCA website.
  • Complete a web application.
  • You have to pay a membership fee.

The registration may request details of company shareholders, key stakeholders, company directors and other key personnel. You can expect a three-month waiting period after submitting your application for FCA assessment and approval.

  • Tax policies on cryptocurrencies.
  • Capital appreciation tax.
  • Most of a bitcoin individual’s income will come from the sale of their holdings for a profit.

In the UK, crypto investors have an investment income limit of £12,300 per year. To the knowledge of HMRC, other possible sources of capital gains include:

  • Buying and selling non-tradable tokens (NFTs).
  • Issuance of tokens that were distributed for free.
  • a token for trading in a cryptocurrency liquidity pool.
  • Income tax.
  • It is important to note that HMRC imposing taxable income on cryptocurrency holdings is a very recent development. It is also a somewhat new idea in the field of cryptography.

Through the staking system, members ensure the legitimacy of each blockchain operation by releasing funds. Revenue and Customs Service (HMRC) policy assumes that income tax is payable whenever a service is performed for crypto assets, regardless of the value of the service. Therefore, the income involved should be taxed at the appropriate rate.

Alternative crypto-based revenue streams:

  • Mining the maximum yield possible.
  • Tokens are sent via airdrop.
  • The process of mining virtual currency.
  • Subtle differences between forks, nodes and loans.
  • Beware of advertisements that may mislead you.

UK authorities updated their regulations on the advertising of crypto assets in January 2022 to protect customers against false or misleading statements.

Here are a handful of the most notable new features:

  • The UK government intends to regulate the deceptive marketing of crypto assets.
  • Legislation regarding cryptocurrency advertising will ensure openness and consistency.
  • Consumers will be better protected by the new standards and new ideas will be encouraged.
  • Despite government efforts to crack down on cryptocurrency advertisements, we still advise consumers to beware of scams and misinformation.

Predictions for the UK Cryptocurrency Regulatory Landscape

The current scenario, led by Russia’s invasion of Ukraine, has been linked to continued financial upheaval. Given the unpredictability of cryptocurrency markets, it is likely that UK regulators will maintain a laser-like focus on crypto service providers.

As part of its broader strategy to transform the UK into a global center for technology and investment in crypto assets, the Government of the United Kingdom (UK) announced and presented plans in April 2022 that would legalize stablecoins as a legitimate form of payment. .

Conclusion

While it is true that buying, selling and trading cryptocurrency in the UK is not illegal, there are still some things to keep in mind.

Businesses need to consider the legal status to adjust their payment option offered to customers and their operations as it is not legally recognized as an official currency at present.

(Disclaimer: Devdiscourse journalists were not involved in the production of this article. The facts and opinions appearing in the article do not reflect the views of Devdiscourse and Devdiscourse claims no responsibility for them.)

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