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  • US Department of Homeland Security to monitor Blockchain Transactions

UK Crypto Taxation and ICO Regulations


Cryptocurrencies are unregulated right now in the UK - the situation has both positives and negatives. On the positive side, cryptocurrency trading isn't prohibited, as in China, and restricted, like in South Korea. But, the downside is consumers have very little protection if anything goes wrong. In 2017, the Financial Conduct Authority warned the consumers that the cryptocurrencies are on "high risk and speculative products".

UK's unadventurous positive regulatory approach

The virtual currencies do not fit easily in an existing financial system in most jurisdictions in the world, and the UK does not specifically regulate them either. FCA does not consider any virtual currencies as currencies and commodities under MiFID II and, thus, has got no regulations around them.

"It, however, does have an authority over the activities that are related to virtual currency derivatives like bitcoin futures, or crypto ETFs (approved)."

Crypto taxation of UK

It depends on an extent to which any currency is used, and this is also subject to the income tax and capital benefits with the latter one to be a probable case and thus looked at quite thoroughly. Gains need to be computed if any disposal is made, for example, if there is any exchange or sale of cryptocurrency in sterling or other fiat currency. Some more examples: when exchanging another cryptocurrency, goods and services, gifting any crypto currency. For tax capital gains, the tax rate is over 20% and can apply only after the realization of the gains. The chargeable gains are reduced with the losses from a year. Furthermore, the loss is carried ahead to set against the chargeable gains in the future years.

Some activities which are exempt from tax liabilities are those which generate speculative gains including wins from betting or gambling. Some exceptions depend on if any action is considered a trade, hobby or commercial act.
Interestingly, FCA's position for a growing number of the ICOs in the UK is blurry. On the other hand, FCA does not explicitly declare any authority on security offerings in a form of ICOs, but, it issues the consumer warnings describing the ICOs as "high-risk investments" and statements like "Whether ICO falls in FCA's regulatory rules or not will just be decided by the case."

"The CryptoTaxMap is one such another company which provides tax rates, categories and more information on taxes in all the countries."

UK ICO Regulations

As already stated, the FCA already warned the investors. There are very high chances of new regulations for ICOs in the coming future. Presently, it is up to companies how they want to conduct ICOs.
UK Banks On Cryptocurrency
In the UK, the support for cryptocurrencies from the bank side is not so good. A few banks support the technology behind it, but at the same time, they have banned the virtual currencies. The following is the list of banks which allows/bans the cryptocurrency:
Virgin Money, Lloyds Bank - Don't allow buying Bitcoin.
HSBC, Santander, Natwest, TSB, Royal Bank of Scotland, Barclays - One can purchase Bitcoins through these banks.
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