Tag: cryptoasset

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Cryptoassets: Taxation of Individuals in the UK
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FCA Fighting Cryptoasset Risks

Cryptoassets: Taxation of Individuals in the UK

By Jonathan Lawrence

On 19 December 2018, the UK tax authority, HM Revenue and Customs (“HMRC”), published a policy paper on the taxation of cryptoassets. The guidance is limited to HMRC’s view in relation to individuals holding cryptoassets and does not extend to tokens or assets held by businesses. The guidance confirms that HMRC does not consider cryptoassets to be currency or money for tax purposes and separates crypto assets into three categories of “tokens”: exchange tokens, utility tokens and security tokens. The guidance focuses on the taxation of “exchange tokens,” a term encompassing assets such as Bitcoin.

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FCA Fighting Cryptoasset Risks

By Jonathan Lawrence

The UK Financial Conduct Authority (FCA) Executive Director of Strategy and Competition recently delivered a speech at The Regulation of Cryptocurrencies event in London. In his remarks, Chris Woolard outlined several steps the FCA is planning to take to combat risks in the cryptoasset market:

  • to help firms better understand the boundaries of current regulation in relation to cryptoassets, the FCA will consult on perimeter guidance by the end of 2018, helping to clarify which cryptoassets fall within the FCA’s existing regulatory perimeter, and those that fall outside;
  • HM Treasury (HMT) is to then consult on whether the regulatory perimeter requires an extension to capture cryptoassets that have comparable features to specified investments, but currently fall outside the perimeter;
  • the FCA will also consult on a prohibition of the sale to retail consumers of derivatives referencing certain types of cryptoassets (for example, exchange tokens), including contracts-for-difference, options, futures and transferable securities;
  • to combat financial crime risks, HMT will undertake one of the most comprehensive responses globally to the use of cryptoassets for illicit activities by applying and going further than the existing directive, the fifth EU Anti-Money Laundering Directive (5AMLD);
  • HMT will first consult and then legislate on how to transpose 5AMLD and broaden the scope of anti-money laundering and counter-terrorism financing regulation; and
  • HMT plans to complete further analysis on whether regulation could meaningfully and effectively address the risks posed by exchange tokens and what, if any, regulatory tools would be most appropriate and then consult in early 2019 on whether and how exchange tokens, as well as related actors such as exchanges and wallet providers, could be regulated effectively.

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