The UK has taken a new step towards regulating crypto assets, with the lower house of parliament adding crypto assets to the list of activities that would be regulated by the upcoming Financial Services and Markets Bill. The Bill will also issue rules to govern stable coin payments.
The UK has held positive views on cryptocurrencies, though not accepting them as legal tender. The current inclusion of crypto will add them to the list of financial instruments or services to be regulated. The Bill will be the first attempt to include crypto assets under the scope of regulation.
Currently in the UK, crypto transactions are taxes on two aspects – for capital gains and as income. The capital gains arise while selling off crypto assets during trading, NFT trading, selling airdrop tokens or during trades on liquidity pools. The income categories include mining, yield farms, staking, airdrops, lending and those related to forks and nodes.
There are two government agencies concerned with taxing crypto – the HM Revenue and Customs, and the Financial Conduct Authority (FCA). All crypto businesses need to register with the FCA and comply with its anti-money laundering regulations and supervision. FCA also requires KYC on central exchanges, and monitors crypto advertising.
Once the draft bill is final and approved by the Upper House and made into law, crypto assets will become part of the Financial Services and Markets Act 2000. Before that, the UK Treasury will hold consultations with the crypto players and related parties to address both the benefits and risks associated with crypto transactions.
Interesting fact: The UK has the largest number of Bitcoin ATMs
According to FinanceMagnates, the UK is Europe’s largest investor in crypto assets, with £126bn estimated value of transactions in 2021.
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