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Following the end of the 2021-2022 United Kingdom tax year on April 5, 2022, the U.K’s Treasury announced that they are working towards making the U.K, a global digital asset technology hub.
Earlier hesitant towards crypto, the U.K is trying to make investments in crypto more attractive.
A report published by the Financial Conduct Authority (FCA), a financial regulatory body in the U.K, shows an increase of 21% in the U.K citizens who held crypto in 2021, the figure has reached 2.3. Million.
HM Treasury revisiting its crypto regulation seemed quite natural with rising interest and potential crypto mass adoption.
The announcement was quite detailed, below is its brief description:
- Stablecoin to be recognized as a form of payment and regulated.
- For helping businesses innovate, legislation will be framed for a market infrastructure sandbox.
- A crypto management group will be created with key figures from regulatory authorities for advising the government.
- U.K. crypto tax legislation will be reviewed in order to propel further crypto market development.
- This summer, the Royal Mint is being commissioned to create an NFT.
- For U.K financial markets, a distributed ledger technology will be proactively explored.
- In May, a two-day “CryptoSprint” event will be organized for seeking further insight and views from key industry stakeholders.
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Great Things To Look Out For In Announcement:
Once stablecoins are recognized as a means of payment, transacting in crypto will become more common and widespread.
Her Majesty’s Revenue and Customs (HMRC) published guidance on the tax treatment of various DeFi investments, earlier this year. It was poorly received, to say the least. Now, the announcement of the DeFi tax is good news as it can mean a changed stance of the government regarding the tax.
An influx of investment in the UK crypto market can be expected if the Investment Manager Exemption becomes enlarged to include crypto assets. Great news for foreign investors!
A crypto engagement group and the FCA CryptoSprint event could be exciting news for the wider industry. Many firms failed to fulfill the requirement of Anti-Money Laundering standards. A more sophisticated approach for creating a regulation across the board could mean many crypto exchanges gain the UK support back.
What Could Possibly Go Wrong?
The review of crypto taxation could mean different ways to tax smaller investors. In February, HMRC published its DeFi guidance, according to which the tax must be paid on transfers to and from DeFi loans, liquidity pools, and even collateral. In addition, the limelight around crypto can also mean more regulation.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
