Cryptoasset technology and investment – UK set to become global hub
Cryptoasset technology in the UK is likely to get a huge boost after the UK government today announced measures aimed at recognising stablecoins as a valid form of payment. The move is part of more comprehensive plans aimed at making the UK a global hub for cryptoasset technology and investment.
Under the proposals, stablecoins will be regulated, allowing the way for it to be used as a recognised form of pavement in the UK.
UK to become Global Hub for Cryptoasset investment
The Government announcement is part of a wider range of measures aimed at making the UK a global hub for cryptoasset investment and technology.
Other measures proposed include:
- Bringing forward legislation for a ‘financial market infrastructure sandbox’ which, the Government claims will help businesses innovate
- A ‘CryptoSprint’, which will be two- day FCA led event
- An NFT, in collaboration with the Royal Mint
- A Cryptoasset Engagement Group, aimed at working more closely with the industry
These measures are part of a suite of measures the Government hopes will ensure the UK financial services sector continues to attract investment and jobs, widening consumer choice and remains at the cutting edge of technology.
Other measures as part of this initiative include exploring how the competitiveness of the UK tax system can be enhanced to encourage further development of cryptoassets in the UK.
The Government is also to review how DeFi loans are treated for tax purposes. (DeFi loans are where holders of cryptoassets lend them, in exchange for a return).
In addition to this, it is also consulting on extending the scope of the Investment Manager Exemption to include cryptoassets.
What type of cryptoasset are Stablecoins?
A form of cryptoasset that are typically pegged to a fiat currency such as the pound sterling or the dollar, stablecoins are (s their name may suggest) intended to maintain a stable value. The UK government believes that with suitable regulation, stablecoins could give wider consumer choice and a more efficient means of payment.
It is intended that the Government will legislate, bringing stablecoins, when used as a means of payment, within the payments regulatory perimeter. This will provide conditions so stablecoins issuers and their service providers can operate and invest in the UK.
Tax and cryptoassets
The tax of cryptoassets in the UK can be complex. Recently, HMRC has written to many holders of crypto, asking them to disclose their crypto investments and crypto trades.
This rapid growth has attracted notable attention from HMRC, who are eager to ensure that all businesses, investors and traders are paying the correct amount of tax on cryptoassets. It is important that anyone active in this sector has their tax affairs structured correctly, in a tax efficient way, whist remaining compliant with HMRC. This will help to avoid any penalties and fines as well as unplanned tax bills.
The specialist team at Alexander & Co is experienced with dealing with the tax issues surrounding cryptoassets and cryptocurrency for traders, investors and businesses. We can ensure that your affairs are structured correctly, in the most tax efficient way and are compliant with HMRC. We are also able to help resolve any current HMRC investigations and by ensuring you remain compliant, minimise the likelihood of any future investigations.
For further information on crypto and how it is taxed in the UK, the following sections may be of interest:
- How are cryptoassets taxed in the UK?
- HMRC nudge letters sent to crypto investors and traders
- DeFi lending and staking – updated HMRC guidance issued
Contact Alexander & Co
Alexander & Co is one of the leading firms providing both accountancy and tax advice regarding crypto.
In addition to providing cryptocurrency tax advice, we provide a comprehensive range of tax and accountancy services. To discuss how we can assist you please contact a member of our specialist team by calling 0161 832 4841, emailing email@example.com or simply filling out the contact form on this page.