UK has been quite receptive to the adoption of the blockchain technology and has been allowing the crypto economy to evolve since its inception in January 2009. The parliament has also exhibited support in its accelerated development.
According to HM Revenue and Customs (HMRC) in UK, the general rules on foreign exchange are applicable to cryptocurrency like bitcoin for corporation and income tax. About 20 percent CGT rate is payable on cryptocurrency profits if they are held as investments. Moreover, the regular UK bitcoin traders are also bound to pay income taxes of up to 45 per cent. Although cryptocurrencies have not been entirely implemented into the financial system for mainstream use with a bespoke legal framework, they are not banned either. It takes time for regulators to analyse and catch up with new technology.
Lately, UK has discussed about various popular crypto exchanges such as Coinbase, Cryptopay, Coinfloor , CEX.io etc. The largest cryptocurrency bitcoin, as of January 9, 2019, as speculated by the investors and traders, leaped sharply and climbed above the psychological USD4,000 mark for the first time in 2019. Meanwhile, the bitcoin price has also been pushed further by the news that CoinFlex, a part of the U.K. bitcoin exchange Coinfloor, has announced plans to offer physical bitcoin futures to Asian investors from February 2019 onwards. The initiative to trade physical bitcoin futures will in fact, reduce manipulation in the market as believed by the stakeholders.
Recently, Robinhood, the U.S. stock trading and crypto exchange app, also announced plans to launch operations in the United Kingdom only to face existing counterparts such as Freetrade and Revolut. The underlying idea is to trade without fees. Evidently, within the crypto economy across the globe, there is an air of competition and innovation.
It seems that UK has understood the knack of dealing with the tech driven digital currency, developed to decentralise the value system and almost instantly transferrable, which has captivated the interest of industries, organisations and governments. With the growing popularity, the banks are trying to adapt the evolving culture. There are massive blockchain projects being run by banks such as HSBC and Lloyd’s of London. Companies are engaging in digitising and upgrading their system for the use of cryptocurrency. Consequently, a surge in fintech companies can be expected across UK and the rest of the world to aid the banks expedite the adaption and implement the relevant technology. Further, a simultaneous upswing in recruitment for cyber security experts and developers with blockchain experience can be expected as cryptocurrencies are only going to grow throughout the foreseeable future.
While cryptocurrency emerged as an independent source of opportunity for investors and business to make million, a number of challenges remain as it gets widely adopted as a method of payment. Many of these challenges are linked to the underlying technology but also include legal, economic and social factors. Anti-money laundering (AML) and Counter terrorism laws are currently being reviewed to the extent to include aspects under cryptocurrency services. However due to the “evolving” nature of the cryptocurrency market, it is likely that further guidance is framed under the UK standards. In addition, the Brexit event might change the landscape as financial entities are already under a restructuring mode to mitigate some anticipated challenges with regards to profitable operations.
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