The United Kingdom has been one of the most proactive countries in cryptocurrency regulation. While other countries have been slower to act, the UK has been working on a framework since early 2018. If you are new to Bitcoin, learn the best way to secure cryptocurrency.
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Earlier there were no strong financial regulatory options that were available for any kind of transaction in UK, and still now, there is no given hard and fast rule about what applies to major crypto dealings of the country.
This article will give you an overview of the UK’s approach to cryptocurrency regulation, including the regulatory bodies involved and the primary points of the regulatory framework. Under the categories that have been given by HMRC, it is told that all the profits that an individual gains from crypto trading will fall under taxable category and also for business houses. They will be under the category of trading profits or miscellaneous income provisions.
The Different Cryptocurrency Regulations in the UK
So you want to know about the different types of cryptocurrency regulations in the UK? Let’s take a look.
Three types of regulation apply to cryptocurrencies in the UK: financial, tax regulation, and criminal regulation.
- The FCA responsibly regulates the financial firm. The FCA applies financial measures to crypto exchanges, brokers, and asset managers. They have published guidance on crypto assets and created a new task force called the Crypto-assets Taskforce (CATF) to coordinate their efforts.
- The tax authority is Her Majesty’s Revenue and Customs (HMRC), which applies tax regulation to Bitcoin ATMs and other crypto-related sales. They treat crypto assets as property, so any gains made on their sale or exchange are subject to Capital Gains Tax. HMRC has also published guidance on tax crypto-related income and gains.
- The police are responsible for the criminal regulation of cryptocurrencies. The National Crime Agency (NCA) is the UK’s lead agency for tackling serious and organized crime, and they have published guidance on cryptocurrency-related crime.
What Do These Regulations Mean for Business Firms and Individuals?
So what do these regulations mean for businesses and individuals?
- For businesses, you’ll need to register with the Financial Conduct Authority (FCA) if you deal in crypto assets, and you’ll need to comply with anti-money laundering and counter-terrorism financing regulations.
- Individuals must disclose any crypto assets they own when filing their tax returns and be subject to capital gains tax on any profits from crypto assets.
In a nutshell, these regulations mean that the UK is taking cryptocurrency seriously, and businesses and individuals need to start taking it seriously too.
How Will These Regulations Impact the Forthcoming Era of Cryptocurrencies in the UK?
How will these new crypto regulations impact the future of cryptocurrencies in the UK? So far, it doesn’t look good. The UK has been a leader in the blockchain space, and it’s home to some of the world’s most innovative and forward-thinking crypto companies. The UK government is painting cryptocurrency as a tool for criminals, and that’s definitely going to have an impact on the industry.
Investors are already spooked, and many are heading for the exits. It could be the start of an ending for cryptocurrencies in the UK. There are certain participants who do not have day-to-day control over the management of various kinds of crypto assets that are locked inside a validator. It is the work of the Validator Service Provider to manage the assets.
What Are the Drawbacks of These Regulations?
The main drawback is that it could stunt the growth of the industry.
The UK government is essentially hampering innovation and preventing businesses from regulations by such restrictive measures. It could have a negative impact on both the economy and the jobs market.
Not to mention, it’s making it difficult for people to invest in cryptocurrencies, which could limit their exposure to this new technology.
The UK’s approach to cryptocurrency regulation is an example for other countries to follow. It has struck a balance between advancing growth in the industry and preserving consumers. It should help foster further growth in the industry while also ensuring that consumers are protected.