Cryptocurrency is one of the most popular notions and currencies in the world. Notably, most developed countries are adopting Crypto and blockchain technology, which is the foundation for its existence. Crypto covers most assets, but Ether, Litecoin, Bitcoin, and many others are most commonly used. These digital assets have been designed for use as means of payment.
Today, you can buy products or services online and pay for them from your Bitcoin wallet. Since most people are embracing the use of Crypto, the UK government saw it wise to regulate its usage. In the UK, Crypto is regulated only for money laundering.
The FCA is responsible for anti-money laundering (AML) and counter-terrorism financing (CTF) activities. That is why it is a requirement that before individuals and businesses start using Crypto in the UK, they should register with the FCA.
Money Laundering and Cryptocurrency in the UK
The use of Crypto and Bitcoin ATMs is legal in the UK. However, what the authorities fear, especially the FCA, is the likelihood of UK citizens investing big in Crypto.
In the UK, the FCA is authorized to facilitate crypto-assets exchange. This means that all the businesses authorized by the FCA should comply with the set crypto regulations and crypto assets like Bitcoin.
It is easy to buy crypto assets in the UK. FCA is coming into the limelight to ensure buying crypto assets is not used in money laundering and financing terrorism. Therefore, any business using Crypto should first register with the FCA.
What are the FCA regulations on Crypto?
The FCA controls how customers buy and sell Crypto with the Know Your Customer (KYC) procedures. KYC provides the business with all information on customers’ passports, IDs, photos, driver’s licenses, etc. The KYC procedure is useful in customer identification when transacting hence limiting foul play.
The FCA also comes up with the Customer Due Diligence (CDD) procedures, which evaluate customer risk and advise the business on precautions to take when transacting. This measure aims to ensure there are no money laundering activities or financing of terrorism while undertaking crypto business.
Even with the FCA being active in the UK, many issues need to be addressed in the UK’s crypto business.
Is Crypto taxed in the UK?
The simple answer to this is yes. Crypto is taxed in the UK. However, the taxes are different between businesses and individuals. The HMRC has acknowledged the uniqueness of Crypto, which means the asset class cannot be compared to the conventional means of payment and investment. Taxes on Crypto are applied based on the entities and activities involved. The HMRC developed crypto taxation in 2019.
You should always take the help of cryptocurrency investigation solicitors for expert legal assistance.
In most cases, the crypto taxes for individuals in the UK are mainly based on the gains and losses taxed under capital gains and all other activities that individuals pursue, like staking, mining, and trading online.
In the UK, individuals and businesses are liable to pay at least one of the following taxes:
- Corporation tax
- Capital gains
- Stamp Duty
- Value Added Tax (VAT)
- Income tax
- National Insurance Contribution
Final Thoughts
Cryptocurrency is becoming more popular in the UK as most businesses and individuals prefer using it to make payments. For this reason, through the HMRC and FCA, the state is coming up with oversight regulations on cryptocurrency exchange amongst businesses and individuals.
In this article, we have looked at some of the regulations the FCA is putting forward to inhibit money laundering and using Crypto to finance terrorism in the UK. As more people continue to adopt and use crypto, we should expect new crypto regulations in the coming years.
